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A 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 
IN  CHICAGO 


THE  UNIVERSITY  OF  CHICAGO  PRESS 
CHICAGO,  ILLINOIS 


THE  BAKER  &  TAYLOR  COMPANY 
NEW  YORK 

THE  CAMBRIDGE  UNIVERSITY  PRESS 
LONDON 

THE  MARUZEN-KABUSHIKI-KAISHA 
TOKYO,  OSAKA,  KYOTO,  FUKUOKA,  SENDAI 

THE  COMMERCIAL  PRESS,  LIMITED 
SHANGHAI 


ONE  HUNDRED  YEARS 
OF  LAND  VALUES    _ 
IN  CHICAGO 

THE  RELATIONSHIP  OF 

THE  GROWTH  OF  CHICAGO  TO  THE  RISE 

IN  ITS  LAND  VALUES,  1830-1933 

BY  HOMER  HOYT 


• 


THE  UNIVERSITY  OF  CHICAGO  PRESS 
CHICAGO  •  ILLINOIS 


COPYRIGHT    1933    BY    THE    UNIVERSITY    OF    CHICAGO 
ALL  RIGHTS  RESERVED.     PUBLISHED  DECEMBER  1933 


COMPOSED  AND  PRINTED  BY  THE  UNIVERSITY  OF   CHICAGO    PRESS 
CHICAGO,  ILLINOIS,  U.S.A. 


To  MY  MOTHER 


AUTHOR'S  PREFACE 

This  study  was  undertaken  because  there  seemed  to  be  no  compre- 
hensive data  available  to  show  the  cyclical  fluctuations  of  land  values 
in  any  American  city,  and  because  the  knowledge  of  the  past  move- 
ment of  land  prices  seemed  to  me  to  be  indispensable  for  any  rational 
real  estate  investment  policy.  The  easily  accessible  land  valuations  of 
the  tax  assessors  that  are  so  frequently  used,  in  most  cases,  either  do 
not  adequately  show  the  course  of  the  real  estate  market  as  indicated 
by  actual  sales  or  are  not  available  in  comparable  form  for  a  sufficiently 
long  period  of  time  for  this  purpose.  Accordingly,  the  most  difficult 
task  involved  in  this  study  was  the  computation  of  land  values  for  the 
2ii-square-mile  area  within  the  1933  corporate  limits  of  Chicago  for 
the  period  from  1830  to  1933.  The  records  of  thousands  of  sales  were 
examined  for  this  period,  which  represented  the  life-span  of  Chicago 
from  its  first  subdivision  to  the  present,  and  these  sales  were  compared 
with  the  appraisals  and  opinions  of  real  estate  dealers.  During  the 
period  1910-33,  the  annual  land- value  maps  of  George  C.  Olcott  were 
extensively  used  to  supplement  the  reports  of  sales.  Even  with  all 
the  evidence  that  could  be  secured  from  thousands  of  abstracts  in 
the  files  of  the  Chicago  Title  and  Trust  Company,  from  considerations 
reported  in  deeds  in  the  files  of  newspapers,  from  appraisals,  and  from 
tax-assessment  records,  it  was  impossible  to  secure  sales  or  valuation 
data  for  every  type  of  land  in  every  square  mile  in  the  city  for  the  one- 
hundred-and-four-year  period  covered  by  the  study.  It  was  frequently 
necessary  to  make  interpolations  based  on  the  trend  of  sales  data  in 
surrounding  sections.  Nevertheless  it  is  believed  that  the  results  are 
substantially  correct,  and  that  they  are  as  accurate  as  the  nature  of  the 
data  will  permit.  Those  who  have  had  practical  experience  with  real 
estate  transactions  know  that  the  same  degree  of  certainty  does  not 
and,  perhaps,  cannot  prevail  in  the  land  market  as  in  the  stock  or 
commodity  markets.  During  recurring  periods  of  stagnation,  there  is 
no  active  real  estate  market,  and  estimates  of  values  at  such  times  can 
at  best  be  only  approximations.  I  do  not  pretend  that  I  have  charted 
the  final  and  absolute  value  of  Chicago  land  for  every  year,  but  I  have 

vii 


viii  AUTHOR'S  PREFACE 

sought  to  obtain  all  the  evidence  that  is  available  and  to  register  in 
graphic  form  the  records  of  sales,  the  opinions,  and  the  current  beliefs 
that  made  up  the  Chicago  land  market. 

While  assuming  sole  responsibility  for  any  errors  and  imperfections 
in  this  book,  I  desire  to  give  credit  to  those  whose  aid  and  co-operation 
made  this  study  possible.  To  Professor  Chester  Whitney  Wright,  of 
the  University  of  Chicago,  at  whose  suggestion  this  investigation  was 
undertaken,  and  under  whose  direction  it  was  pursued,  I  am  greatly 
indebted  both  for  his  suggestions  in  the  fundamental  plan  of  the  work 
and  for  his  untiring  labor  in  revising  the  manuscript.  To  Professor 
Harry  Alvin  Millis,  chairman  of  the  Department  of  Economics  of  the 
University  of  Chicago,  I  express  my  deep  gratitude  for  his  conscientious 
criticism  and  his  numerous  helpful  suggestions.  To  Professor  Simeon 
E.  Leland,  of  the  University  of  Chicago  and  of  the  Illinois  State  Tax 
Commission,  I  am  greatly  indebted  for  invaluable  constructive  criti- 
cism during  all  stages  of  the  work  and  particularly  on  the  last  part  of 
the  chapter  on  the  real  estate  cycle.  Professor  Garfield  V.  Cox  also 
gave  me  many  helpful  suggestions  on  the  real  estate  cycle. 

Many  a  member  of  the  real  estate  profession  has  contributed  a  life- 
time of  effort  to  gathering  information  that  is  presented  in  these  pages. 
One  great  organization — the  Chicago  Title  and  Trust  Company — that 
is  not  in  the  real  estate  business  assisted  this  publication  in  many  ways. 
First,  it  placed  at  my  disposal  its  invaluable  plats,  maps,  and  the  ab- 
stracts that  gave  records  of  sales  for  over  a  hundred  years.  Second,  in 
a  time  of  great  financial  stringency  when  real  estate  was  extremely  de- 
pressed the  officials  of  this  Company  saw  the  practical  value  of  a  long- 
range  perspective  with  regard  to  land  values,  and  they  undertook  to 
arouse  public  interest  in  this  volume.  In  a  series  of  educational  ad- 
vertisements and  booklets  they  sought  to  demonstrate  that  historical 
research  in  land  values  tends  to  stabilize  real  estate.  Third,  the  Chicago 
Title  and  Trust  Company  has  contributed  chiefly  to  the  funds  neces- 
sary for  the  cost  of  publication  of  this  book.  This  is  greatly  appreciated. 
Of  course,  I  am  extremely  grateful  to  General  Abel  Davis,  chairman  of 
the  Board;  Mr.  Holman  D.  Pettibone,  president;  Mr.  Kenneth  E.  Rice, 
vice-president;  and  Mr.  Paul  P.  Pullen,  director  of  publicity,  for  the 
benefits  that  have  accrued  to  me  directly  as  a  result  of  their  farsighted 
policy.  I  am  grateful  also  to  Mr.  J.  Frank  Graf,  vice-president  of  the 
Chicago  Title  and  Trust  Company,  for  his  services  in  procuring  for  me 


AUTHOR'S  PREFACE  ix 

the  plats  and  abstracts  of  his  Company,  and  to  Mr.  K.  L.  Van  Sickle 
of  the  Chicago  Title  and  Trust  Company  for  his  invaluable  appraisal 
data.  I  am  greatly  indebted  also  to  Mr.  Carroll  Dean  Murphy  and  Mr. 
Frank  R.  Schwengel  of  the  firm  of  Carroll  Dean  Murphy,  Inc.,  for 
their  aid  in  preparing  the  book  for  publication. 

Other  civic  groups  interested  in  urban  land  problems  have  given  me 
the  fullest  co-operation.  I  desire  to  express  my  appreciation  for  the 
assistance  given  by  Mr.  E.  L.  Bailey,  of  the  Chicago  Regional  Planning 
Association,  particularly  in  the  case  of  studies  in  lots  subdivided  in 
the  Chicago  Metropolitan  Area.  I  also  want  to  thank  Mr.  Hugh  E. 
Young,  of  the  Chicago  Plan  Commission,  for  allowing  me  to  inspect  his 
large  maps  on  the  blighted  area.  Mr.  J.  V.  Sullivan,  of  the  Chicago 
Surface  Lines,  furnished  me  the  material  for  the  transportation  maps. 

The  county  assessor,  Mr.  J.  L.  Jacobs,  by  whom  I  have  been  em- 
ployed for  statistical  work  in  connection  with  the  1931  assessment  of 
real  estate  in  Cook  County,  has  given  me  great  assistance.  In  his  untir- 
ing efforts  to  make  an  honest  and  correct  assessment  of  land  and  build- 
ings in  Cook  County  in  1931,  he  secured  the  co-operation  of  the  leading 
real  estate  men  in  the  city  and  through  his  efforts  I  was  able  to  secure 
the  benefits  of  his  voluminous  records  and  also  the  advice  and  criticism 
of  men  with  long  experience  in  the  real  estate  profession.  I  am  particu- 
larly indebted  also  to  members  of  Mr.  Jacobs'  staff,  with  whom  I  have 
been  pleasantly  associated:  Mr.  Walter  R.  Kuehnle,  chief  of  the  Real 
Estate  Division;  Mr.  F.  A.  Schepler,  chief  of  the  Land  Division;  Mr. 
Benjamin  Baltzer,  chief  land  assessor  for  the  South  Side;  Mr.  Stanley 
C.  Chadwick,  chief  land  assessor  for  the  North  Side;  Mr.  Roger  E.  Ap- 
pleyard,  chief  land  assessor  for  the  West  Side;  and  Mr.  H.  S.  Rosen- 
thai  and  Mr.  A.  K.  Wyatt  of  the  Industrial  Department. 

This  book  would  not  have  been  possible  without  the  work  of  George 
C.  Olcott,  who  in  his  lifetime  has  compiled  twenty- two  books  of 
Chicago  land  values,  which  furnish  a  reliable  annual  index  of  Chicago 
land  values  since  1910.  There  are  few,  if  any,  cities  that  have  such  a 
record  covering  a  period  of  time  in  which  sales  data  have  been  difficult 
to  secure.  Because  of  Mr.  Olcott's  work,  Chicago  has  been  selected  as 
a  laboratory  for  land- value  analysis  by  economists  and  sociologists. 

There  are  many  real  estate  men  who  have  contributed  their  time 
and  thought  to  material  that  has  appeared  in  this  book,  and  among 
them  I  should  like  to  express  my  thanks  to  Mr.  William  A.  Bond  for 


x  AUTHOR'S  PREFACE 

his  appraisals  and  sales  records  and  to  Mr.  Clifford  R.  Bechtel  and  Mr. 
John  Usher  Smyth.  Mr.  William  Scott  Bond  furnished  valuable  in- 
formation on  real  estate  interest  rates.  Mr.  Lyndon  Lesch,  of  the 
Business  Office  of  the  University  of  Chicago,  Mr.  Earle  Shultz,  Mr. 
John  P.  Hooker,  and  Mr.  Graham  Aldis  furnished  valuable  aid  by 
giving  me  records  of  certain  buildings.  Mr.  Edward  G.  Skindzier, 
manager  of  the  London  Guaranty  and  Accident  Building,  furnished 
me  data  of  great  value  concerning  the  central  business  district  of  Chi- 
cago. Many  old  residents  of  the  city  have  aided  this  work  by  giving 
me  accounts  of  the  character  of  the  improvements  in  various  sections 
of  the  city  in  the  period  following  the  great  fire  of  1871.  I  desire  par- 
ticularly to  thank  Mr.  Emil  Rudolph,  Mr.  John  E.  Cornell,  Mr.  Frank 
A.  Henshaw,  and  Mr.  William  H.  Spikings. 

The  books  and  monographs  of  Professor  Herbert  D.  Simpson  and 
John  E.  Burton  of  Northwestern  University  have  also  proved  sugges- 
tive and  helpful  to  me  in  compiling  this  study. 

In  the  annals  of  the  past,  many  whose  names  are  unknown  to  me 
have  furnished  invaluable  material.  The  real  estate  editors  of  the 
Chicago  Tribune,  who  weekly  wrote  searching  comments  upon  real 
estate  transactions  in  the  Sunday  papers  since  1870,  the  editors  of  the 
Economist,  the  editors  of  the  Real  Estate  and  Building  Journal,  have 
written  many  lines  which  reappear  in  these  pages.  Mr.  Frank  Chandler 
wrote  much  on  early  land-value  history,  and  gave  me  access  to  his 
private  files  before  his  death. 

Mr.  Everett  Chamberlin,  in  his  book,  Chicago  and  Its  Suburbs 
(1874),  and  Mr.  Mark  L.  Putney,  in  his  Land  Values  and  Historical 
Notes  of  Chicago  (1890,  1900),  furnished  great  assistance.  The  work  of 
Captain  A.  T.  Andreas  on  the  History  of  Chicago  (1886)  proved  very 
useful. 

In  formulating  this  study  I  have  been  greatly  stimulated  by  the 
ecological  studies  made  by  the  Departments  of  Sociology  of  the  Uni- 
versity of  Chicago  and  the  University  of  Michigan,  and  I  desire  to 
express  my  gratitude  for  helpful  suggestions  in  the  works  of  Professors 
Robert  E.  Park,  Roderick  D.  McKenzie,  Ernest  W.  Burgess,  and  Louis 
Wirth.  Mr.  Earl  Johnson's  studies  of  the  ecology  of  the  central  business 
district  of  Chicago  have  been  very  helpful. 

I  desire  particularly  to  thank  the  librarians  of  the  Chicago  His- 
torical Society  for  the  use  of  their  books,  maps,  newspaper  files,  and 


AUTHOR'S  PREFACE  xi 

manuscript  material.  Miss  Alice  Daly,  of  the  Chicago  Historical  So- 
ciety, aided  me  in  securing  the  Ogden  letters  and  other  original  docu- 
ments. I  am  also  indebted  to  the  librarians  of  the  University  of  Chi- 
cago, of  the  Newberry  Library,  and  of  the  Chicago  Public  Library  for 
the  use  of  their  newspaper  files.  Mr.  Charles  Newcomb,  of  the  social- 
science  staff  of  the  University  of  Chicago,  planned  the  technique  of  the 
maps  and  charts  in  this  book,  and  Miss  Mae  Schiffman  executed  the 
drawings.  To  both  of  them  I  express  my  appreciation.  I  am  indebted 
to  Miss  Janet  Murray  for  the  computations  of  the  trends  for  the  charts 
on  the  Chicago  real  estate  cycle.  I  express  my  appreciation  also  to  Mr. 
George  S.  Wheeler  for  his  careful  reading  of  the  manuscript. 

Finally,  the  city  of  Chicago  itself,  with  all  its  kaleidoscopic  neigh- 
borhoods and  its  babble  of  tongues,  is  an  inspiration  to  me.  This  city, 
with  all  its  rough  edges  and  its  bluntness,  is  a  city  with  a  unique  and 
magnetic  urban  personality.  The  land-value  changes  in  such  a  city 
reveal  the  methods  of  physical  growth  and  the  moods  of  a  people  in  an 
environment  with  which  I  have  been  intimately  associated.  Hence,  I 
reluctantly  come  to  the  end  of  a  pleasant  task,  hoping  that  other  citi- 
zens of  Chicago  will  have  the  delight  of  digging  up  the  facts  for  his- 
tories and  studies  of  other  phases  of  Chicago's  many-sided  life.  For 
such  historical  research  will  make  the  present  Chicago  seem  more  real 
and  vital  to  us. 

HOMER  HOYT 

CHICAGO,  ILLINOIS 


FOREWORD 

There  is  a  considerable  literature  on  land  economics,  but  in  so  far  as 
I  know  Mr.  Hoyt's  volume  presents  the  results  of  the  first  comprehen- 
sive study  of  land  values  in  a  large  city  over  a  long  period  of  time.  It 
brings  together  from  a  great  variety  of  sources  the  main  facts  and  at- 
tempts to  explain  them  in  their  interrelations.  The  result  is  a  distinct 
contribution  both  to  the  economic  and  social  history  of  Chicago  and  to 
urban  land  economics.  Most  interesting,  perhaps,  and  most  suggestive 
of  the  several  chapters  is  the  final  one  on  the  real  estate  cycle. 

The  history  of  land  values  in  Chicago  should  assist  in  correcting  er- 
roneous notions  concerning  urban  land  values.  The  single  tax  doctrine 
that  the  changes  are  all  gains,  large  and  unearned,  might  lead  us  to  be- 
lieve that  urban  land  values  rise  steadily  without  any  recessions  or  set- 
backs. This  is  not  true.  Banks,  insurance  companies,  and  other  inves- 
tors will  find  in  the  volume  much  to  ponder  over.  Students  of  taxation 
will  find  facts  to  be  taken  into  consideration  when  they  attempt  to  de- 
velop a  properly  rounded  system  of  taxation,  and  those  charged  with 
assessing  real  estate  for  the  purpose  of  taxation  will  find  detail  here  and 
there  pointing  to  matters  they  should  not  overlook  as  they  go  about 
their  work. 

Perhaps  this  volume  could  not  have  been  written  had  not  Mr.  Hoyt 
engaged  in  the  "real  estate  game"  in  boom  and  depression,  after  devot- 
ing several  years  to  the  study  and  teaching  of  economics.  His  experi- 
ence in  assessing  real  estate  has  also  been  helpful.  The  volume  of  data 
to  be  collected,  studied,  and  weighed  was  appalling;  the  factors  to  be 
discovered  and  held  in  mind  many,  interrelated,  and  confusing.  No 
doubt  errors  have  crept  in  and  remain  undetected  by  the  author  and  by 
those  of  us  who  have  read  the  manuscript.  Perhaps  there  will  be  differ- 
ence of  opinion  as  to  some  of  the  methods  employed.  Certainly  the  vol- 
ume cannot  be  regarded  as  the  final  word  on  every  phase  of  the  subject 
discussed.  Yet  it  is  a  contribution  of  great  value. 

H.  A.  MILLIS 


xiii 


TABLE  OF  CONTENTS 

PAGE 

LIST  OF  ILLUSTRATIONS xxiii 

LIST  OF  TABLES  ...,'.. xxvii 

PART  I.    HISTORY  OF  THE  RELATION  OF  THE  GROWTH  OF 
CHICAGO  TO  THE  RISE  IN  ITS  LAND  VALUES,  1830-1933 

CHAPTER 

I.  THE  CANAL  LAND  BOOM,  1830-42 3 

A.  Introduction:  Objectives  of  the  Study 3 

B.  Causes  of  the  Early  Growth  of  Chicago 7 

The  portage.  The  fort.  The  canal.  Land  trails  to  Chicago. 
The  growth  of  Chicago,  1830-32.  Chicago  in  1833.  Chicago  in 
1834.  Chicago  in  1835-36. 

C.  Land  Values  in  Chicago,  1830-42 23 

The  start.  The  rise  begins.  Gaining  momentum.  At  full  speed. 
The  peak.  A  survey  at  the  summit.  The  lull.  The  forces  of  de- 
pression. The  sharp  decline.  The  bottom.  A  survey  at  the  bot- 
tom. The  aftermath. 

II.  THE  LAND  BOOM  OF  THE  RAILROAD  ERA,  1843-62 45 

A.  The  Period  from  1843  to  1848 45 

A  new  start  on  the  canal.  Growth  of  wagon  and  lake  traffic.  The 
physical  growth  of  Chicago,  1843-48.  A  slow  rise  in  land  values. 

B.  The  Period  from  1848  to  1857;  the  New  Agencies  of  Transportation 

and  Communication 53 

The  canal.  The  telegraph.  The  plank  roads.  The  railroads. 
Grain  and  lumber  trade.  Infant  industries.  The  new  banks.  The 
new  wholesale  trade.  The  physical  growth  of  Chicago,  1848-57. 
New  buildings  and  public  improvements.  Chicago's  expansion. 
The  rise  in  land  values,  1848-57. 

C.  The  Period  from  1857  to  1862;  the  Panic  of  1857  and  the  Civil  War      74 

The  panic  of  1857.  The  depression  in  1858.  The  year  1859.  The 
year  1860.  The  collapse  of  the  state  banks  of  issue,  1861-63.  The 
horse  railways.  Land  values  in  1862. 

III.  THE  LAND  BOOM  THAT  FOLLOWED  A  PANIC,  A  CIVIL  WAR,  AND  A 

GREAT  FIRE,  1863-77 81 

A.  The  Later  Civil  War  Period,  1863-65 81 

B.  The  Post-war  Boom,  1865-71 82 

Growth  of  Chicago's  trade  and  manufactures,  1865-71. 


xvi  TABLE  OF  CONTENTS 

CHAPTER  PAGE 

C.  Rise  in  Chicago  Land  Values,  by  Use  and  Occupation  Areas,  1865-71       88 

The  main  business  district.  The  fashionable  residential  areas. 
The  manufacturing  centers,  1863-71.  The  slums,  vice  areas,  and 
workingmen's  quarters,  1863-71.  The  secondary  business  streets. 
The  parks,  1865-71.  The  suburbs.  The  spread  of  the  speculative 
land  movement,  1868-71. 

D.  The  Great  Fire  of  1871  and  the  Period  before  the  Panic  of  1873     .     101 

The  great  fire  of  October  9,  1871.  Increase  in  the  value  of  outly- 
ing lands,  1865-73.  A  survey  of  Chicago  land  values  at  the  peak 
of  1873. 

E.  The  Panic  of  1873  and  the  Subsequent  Depression 117 

F.  A  Survey  at  the  Bottom  in  1877-79 125 

The  silver  lining. 

IV.  THE  LAND  BOOM  OF  THE  FIRST  SKYSCRAPERS  AND  THE  FIRST  WORLD'S 

FAIR,  1878-98 ••.--  .     .     128 

A.  Recovery  in  General  Business  Conditions,  1878-84 128 

The  effect  on  the  trade,  manufactures,  and  railroads  of  Chicago. 
The  general  effect  of  improved  business  conditions  upon  Chicago 
land  values. 

B.  The  Specific  Methods  of  Recovery  of  Chicago  Land  Values,  1878-83     132 

i.  Bargains  in  the  central  business  district,  1879-80.  2.  The 
boom  on  Michigan  Boulevard,  1880.  3.  The  "resurrection"  of 
South  Chicago,  1879-83.  4.  Pullman.  5.  The  boom  in  the  new 
Board  of  Trade  Quarter.  6.  The  "flat  craze."  7.  Growth  of  the 
outer  edges  of  Chicago.  8.  Review  of  the  rise  in  land  values  in  the 
Chicago  area,  1878-83. 

C.  The  Period  from  1884  to  1886 141 

The  recession  in  general  business  activity  in  1883. 

D.  Special  Factors  in  the  Movement  of  Chicago  Land  Values  from  1886 

to  1894        142 

i.  The  growth  of  Chicago  railroads  and  manufactures,  1886-94: 
(a)  The  growth  of  manufacturing.  2.  Internal  transportation, 
1887-94:  (a)  The  cable  loops,  (b)  Projected  elevated  and  surface 
lines.  3.  Steel-frame  skyscrapers,  1885-94.  4.  Annexation.  5. 
The  World's  Fair.  6.  Department  stores  and  apartments. 

E.  The  Movement  of  Land  Values  in  the  Chicago  Real  Estate  Market, 
1886-94 159 

The  beginning  of  a  new  boom,  1886-88.  The  boom  under  way, 
1889.  Speculation  in  acre  tracts  and  subdivision  activity.  The 
culmination  of  the  boom,  1890.  The  beginning  of  the  lull,  1891. 
The  onset  of  the  panic,  1893. 

F.  New  Transportation  Lines,  1894-98 181 


TABLE  OF  CONTENTS  xvii 


G.  Summary  of  the  Trend  of  Chicago  Land  Values,  1877-98   .      .      .     184 
The  central  business  section.  Fashionable  residential  areas,  1877- 
95.  Outlying  business  centers.   Rise  in  the  value  of  acre  tracts, 
1879-92.  The  rapid  population  growth  of  the  outlying  territories. 

V.  THE  LAND  BOOM  or  A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR,  1898- 
1933       ...................     *96 

A.  Survey  of  the  Causes  of  the  Growth  of  Chicago,  1830-90  and  1890- 
1933        ..................     J96 

B.  The  Period  from  1898  to  1918     ...........     200 

Chicago  in  1900.  Beginning  of  the  recovery  in  Chicago  real 
estate.  New  transportation  systems.  Effect  on  different  sections 
of  the  city.  The  central  business  district:  office  buildings.  The 
Loop  retail  district.  Downtown  wholesale  area.  Summary: 
downtown  area.  Expanding  wholesale  and  warehouse  interests. 
New  manufacturing  centers.  Value  of  railroad  and  manufacturing 
property.  Fashionable  residential  property.  Apartments.  Old 
residential  areas.  New  residential  areas.  The  Chicago  land  mar- 
ket as  a  whole,  1900-1908. 

The  Period  from  1908  to  1918:  Central  business  district.  Outly- 
ing business  centers.  Growth  of  new  neighborhoods.  Acre  and 
subdivision  activity.  Fashionable  residential  areas.  Old  residen- 
tial areas.  Manufacturing  and  warehouse  districts.  Apartments. 
Review  of  the  market  as  a  whole,  1908-18. 

C.  The  Period  from  1919  to  1933     ...........     232 

Survey  of  the  general  factors  affecting  urban  land  in  the  United 

States,  1919-26.  The  growth  of  the  trade  and  manufactures  of 

Chicago,  1921-29.  The  growth  in  real  estate  factors,  1919-26. 

Population  increase.  The  building  boom. 

Survey  of  movement  of  Chicago  land  values  by  regions  and  types 

of  property:  i.  Central  business  district.    2.  The  near  North 

Side.  3.  Tall    apartment    buildings.  4.  Two-    and    three-story 

apartment  building  areas.    5.  Bungalow  areas.   6.  Old  residen- 

tial  areas.  7.  Industrial   areas.  8.  Outlying   business   centers. 

9.  Subdivision  and  acreage  tracts. 

The  Chicago  real  estate  market  as  a  whole,  1921-29:    Chicago 

land  values  at  the  peak. 

The  period  from  1929  to  1933:  Dulness  sets  in.  The  stock-mar- 

ket boom  and  crash.  The  sharp  decline  of  real  estate  values  in 


A  survey  at  the  bottom,  March,  1933:  The  year  1933:  a  turning- 
point. 


xviii  TABLE  OF  CONTENTS 

PART  II.    ANALYSIS  OF  THE  RELATION  OF  THE 

GROWTH  OF  CHICAGO  TO  THE  RISE  OF  ITS 

LAND  VALUES 

CHAPTER  PAGE 

VI.  THE  RELATION  BETWEEN  THE  GROWTH  OF  CHICAGO  AND  THE  RISE  OF 

ITS  LAND  VALUES  .     .     .     .,.,,./.     ,.     •     -\-     ,'•     •     •     279 

A.  The  Demand  for  Chicago  Land       .    .....     ..-•....     .     ....     279 

i.  The  swarm  of  people:  (a)  The  growth  of  Chicago  compared 
with  that  of  other  American  cities,  (b)  Where  did  the  people 
come  from?  (c)  Why  did  they  come?  2.  Increase  in  the  number 
of  buildings:  (a)  Increase  in  the  volume  of  building  space,  (b) 
Factors  determining  the  volume  of  building  space,  (c)  Classifica- 
tion of  buildings  by  type  of  use.  (d)  The  average  height  of  build- 
ings in  the  Chicago  area,  (e)  The  intensity  of  land  utilization  in 
Chicago. 

B.  The  Supply  of  Chicago  Land .      .     295 

i.  The  practical  limit  to  the  supply  of  Chicago  urban  land:  (a) 
Lateral  expansion  by  more  rapid  transportation.  (6)  The  exten- 
sion into  the  air. 

C.  Causes  of  Differences  in  Land  Values  within  Chicago     ....     297 

i.  The  land-value  contour  map.  2.  Physical  causes  of  land-value 
variations:  (a)  The  effect  of  the  lake.  (6)  The  effect  of  the  river. 
(c}  The  Chicago  plain,  (d)  The  three  sections  of  the  city.  3. 
The  growth  of  different  types  of  land  uses :  (a)  The  fashionable 
residential  areas:  (i)  The  decline  of  Prairie  Avenue.  (2)  The 
lake  front  grows  in  importance.  (6)  Cheap  residential  areas :  (i) 
Expansion  of  racial  and  nationality  groups,  (c)  Industrial  areas. 

(d)  Outlying  business  centers :  (i)  Store  rents  and  traffic  counts. 

(e)  The  central  business  district  of  Chicago.  (/)  Summary:  Chi- 
cago land  values  by  types  of  uses. 

D.  The  Long-Run  Trend  of  Chicago  Land  Values 344 

i.  Corrections  of  the  land-value  data  for  changes  in  wholesale 
prices,  wages,  and  interest  rates:  (a)  The  change  in  the  interest 
rate.  (6)  Allowance  for  the  cost  of  street  improvements.  2. 
Growth  of  money  at  compound  interest  and  rise  of  land  values 
compared.  3.  Taxation. 

E.  Trend  of  Population  and  Land  Values  by  Districts  .     .     .     .      -353 

i.  The  centrifugal  forces  affecting  population.  2.  The  effect  of 
population  changes  on  the  land-value  pattern.  3.  The  difficulty 
of  developing  new  areas  compared  with  the  difficulty  of  reclaim- 
ing "blighted"  areas.  4.  The  effect  of  shifting  land  uses.  5.  Specu- 
lative exaggeration  of  possible  demand  for  certain  types  of  uses. 
6.  The  future  trend  of  population  and  land  values. 


TABLE  OF  CONTENTS  xix 

CHAPTER  PAGE 

VII.  THE  CHICAGO  REAL  ESTATE  CYCLE      .     .  • .     .     .368 

A.  The  Tide  of  Population   .     .     .-    .     .    ,,.    :      .     -.      .      .      .      .     368 

B.  Definition  of  the  Chicago  Real  Estate  Cycle    ....    ^=^7 — .     369 

C.  The  Effect  of  Population  Growth  on  the  Chicago  Real  Estate  Cycle    372 

i.  The  initial  impulse — a  sudden  spurt  in  population  growth.  2. 
The  supply  of  houses  cannot  be  immediately  increased.  3.  Quali- 
fications as  to  the  influence  of  population  on  the  real  estate  cycle: 
(a)  Limitations  of  the  population  and  land-value  data. 

D.  The  Sequence  of  Events  in  the  Chicago  Real  Estate  Cycle  .     .      .     377 

i.  Gross  rents  begin  to  rise  rapidly.  2.  Net  rents  rise  even  more 
rapidly.  3.  As  a  result  of  the  rise  in  rents,  selling  prices  of  exist- 
ing buildings  advance  sharply.  4.  It  pays  to  erect  new  buildings. 
5.  The  volume  of  new  construction  rises.  6.  The  volume  of  build- 
ing is  stimulated  by  easy  credit.  7.  "Shoestring"  financing  swells 
the  number  of  new  structures.  8.  The  new  buildings  absorb  va- 
cant land:  the  land  boom.  9.  Optimistic  population  forecasts  dur- 
ing the  boom.  10.  The  vision  of  new  cities  in  cornfields:  the 
method  of  some  subdividers.  n.  Lavish  expenditures  for  public 
improvements.  12.  All  the  real  estate  factors  at  full  tide :  the  peak. 
13.  The  reverse  movement  begins :  the  lull.  14.  Foreclosures  in- 
crease. 15.  The  stock-market  dtbdde  and  the  onset  of  the  de- 
pression in  general  business.  1 6.  The  process  of  attrition.  17.  The 
banks  reverse  their  boom  policy  on  real  estate  loans.  18.  The 
period  of  stagnation  and  foreclosures.  19.  The  wreckage  is 
cleared  away.  20.  Ready  for  another  boom  which  does  not  come 
automatically. 

E.  Minor  Movements  of  the  Individual  Real  Estate  Factors     ...     403 

F.  Statistical  Summary  of  Sequence  of  Factors  in  the  Chicago  Real 
Estate  Cycle 405 

G.  The  Chicago  Real  Estate  Cycle  Compared  with  the  General  Business 
Cycle  in  the  United  States 407 

i.  The  magnitude  of  the  oscillations.  2.  Duration  of  the  Chicago 
real  estate  and  general  business  cycles :  (a)  The  long  periods  of 
depression  in  Chicago  real  estate.  3.  The  relationship  of  wage 
and  interest  rates  to  the  land-value  cycle.  4.  The  sequence  of  the 
real  estate  and  the  commodity  and  stock  cycles :  (a)  The  valleys 
coincide  but  the  peaks  do  not.  (b)  Commodity,  land,  and  stock 
speculations  do  not  come  together  but  alternate,  (c)  The  ad- 
vantage of  a  source  of  liquid  capital  for  real  estate  operators. 
(d)  Speculators  tend  to  stick  to  the  game  they  know  best,  (e) 
The  public  is  swayed  by  the  prevailing  crowd  psychology.  (/) 
The  delayed  effects  of  a  great  war. 
H.  Real  Estate  Cycles  May  Be  a  Passing  Phase 423 


xx  TABLE  OF  CONTENTS 

APPENDIXES 

APPENDIX  PAGE 

I.  THE  CHICAGO  LAND  MARKET     .     .     .     . 427 

A.  The  Lack  of  Homogeneity  of  Chicago  Lots 427 

i.  Layout  of  the  original  subdivision  lot  and  block  size:  depth- 
rule  and  corner-influence  factors.  2.  Differences  in  the  owner's 
title:  (a)  Guaranty  policies  of  the  Chicago  Title  and  Trust  Com- 
pany, (b)  The  Torrens  system,  (c)  Differences  in  mortgages  and 
leasehold  interests,  (d)  Differences  in  financial  necessities  of  the 
owner,  (e)  Differences  in  ownership  units.  (/)  Differences  in  the 
effectiveness  of  propaganda.  3.  Differences  in  land  values  due  to 
actions  of  the  community  or  the  state:  (a)  Differences  in  tax 
rates  and  exemptions,  (b)  Differences  in  foreclosure  and  other 
laws  relating  to  land  titles,  (c)  Differences  hi  building  codes  and 
fire  limits. 

B.  The  Mechanism  of  the  Chicago  Land  Market 441 

i.  Buyers  and  sellers:  (a)  Degree  of  knowledge  of  land  values. 
(b)  Purpose  of  buying  land,  (c)  Residence  or  occupation  of  the 
buyer,  (d)  Race  or  nationality.  2.  Methods  of  bringing  buyers 
and  sellers  together.  3.  Signing  the  contract.  4.  Terms  of  sale 
and  methods  of  financing  purchases.  5.  Sources  of  price  informa- 
tion. 6.  Future  relations  of  the  parties.  7.  Seasonal  elements  in 
the  land  market. 

C.  The  Fundamental  Basis  of  Land  Values:  Capitalization  of  Net  In- 
come        449 

i.  Necessity  of  a  building  to  produce  income.  2.  Suitability  of 
building  to  location.  3.  The  residual  income.  4.  Forecasting  fu- 
ture incomes.  5.  Factors  in  determining  future  ground  rent. 

D.  Speculative  Errors  in  Calculating  Future  Chicago  Land  Income     .     456 

i.  Errors  in  estimating  long-run  forces  of  supply  and  demand: 
(a)  Demand-purchasing  power,  (b)  Supply,  (c)  Capitalization 
rate,  (d)  Wage  rates,  (e)  Movement  of  a  leader:  human  and 
catastrophic  factors.  2.  Errors  due  to  the  business  cycle. 

II.  METHODS  EMPLOYED  IN  DETERMINING  CHICAGO  LAND  VALUES,  1830- 
1932 460 

A.  The  Main  Methods  Employed  in  Determining  the  Value  of  Chicago 
Land 460 

i.  Sources  of  land-value  data — assessments  for  taxation  pur- 
poses. 2.  Advertised  or  listed  prices.  3.  Appraisals  and  opinions 
of  experts.  4.  Sales. 

B.  Sources  of  Sales  Data 465 

C.  Method  of  Computing  Total  Value  of  Chicago  Land  from  Sample 
Sales 467 

III.  STATISTICAL  TABLES 470 


TABLE  OF  CONTENTS  xxi 

BIBLIOGRAPHY 

PAGE 

BIBLIOGRAPHY 497 

INDEX 
INDEX 503 


LIST  OF  ILLUSTRATIONS 

MGURE  PAGE 

1 .  Location  of  Chicago  with  Respect  to  Waterway  Systems      ....  8 

2.  Land  Trails  to  Chicago 14 

3.  Map  of  Chicago  in  1830 16 

4.  Subdivision  Plat  of  "Original  Town  of  Chicago,"  1830 25 

5.  Original  Subdivisions,  1830-43 32 

6.  Land  Values  by  Square-Mile  Sections,  1836 34 

7.  Land  Values,  1836,  Indicated  by  Sales  of  Acre  Tracts 35 

8.  Land  Values,  1841-43,  Indicated  by  Sales  of  Acre  Tracts     ....  43 

9.  Railroads  Entering  Chicago  in  1854 57 

10.  Original  Subdivisions,  1844-62 68 

11.  Land  Values  per  Front  Foot,  1856 71 

12.  Land  Values  by  Square-Mile  Sections,  1857 72 

13.  Land  Values,  1856-57,  Indicated  by  Sales  of  Acre  Tracts       ....  73 

14.  Land  Values,  1860-63,  Indicated  by  Sales  of  Acre  Tracts     ....  79 

15.  Chicago  Trade  and  Manufactures,  1840-1931        ....  85 

16.  Sewers,  Paved  Streets,  and  Bridges,  1873 .  92 

17.  The  Burned  Area,  1871,  and  Fire  Limits,  1872 105 

18.  Extent  of  Settled  Area  for  the  Periods  1834,  1844,  1857,  and  1873   .      .  106 

19.  Original  Subdivisions,  1863-79 no 

20.  Land  Values  per  Front  Foot,  1873 112 

21.  Land  Values  by  Square-Mile  Sections,  1873 114 

22.  Land  Values,  1870-73,  Indicated  by  Sales  of  Acre  Tracts     ...  115 

23.  Horse-Car  Lines  in  1880 126 

24.  Street-Car  Lines  in  1891 145 

25.  Extension  of  City  Limits  by  Annexations 154 

26.  Land  Values  per  Front  Foot,  1892 186 

27.  Land  Values  for  Each  Square-Mile  Section,  1892        .....  187 

28.  Land  Values,  1890-92,  Indicated  by  Sales  of  Acre  Tracts     ....  194 

29.  Extent  of  the  Settled  Area  in  1899 204 

30.  Factors  in  the  Growth  of  Chicago,  1890-1932        .      .      .      .      .      .      .  206 

31.  Surface  and  Elevated  Lines  in  1902 209 

32.  Residential  Land  Values  per  Front  Foot  in  1910 220 

33.  Land  Values  for  Each  Square-Mile  Section  in  1910 221 

34.  Fluctuations  in  the  Net  Income  of  a  Chicago  Apartment  Building, 
1907-31 ....  239 

35.  Fluctuations  in  the  Net  Income  of  an  Office  Building  in  Chicago,  1905- 

32      ....            240 

36.  Distribution  of  Buildings  Seven  Stories  High  or  Over,  1933       ...  243 

37.  Land  Values  on  Seventy-ninth  Street,  Stony  Island  to  Crawford,  1910, 
1928,  1931 250 

xxiii 


xxiv  LIST  OF  ILLUSTRATIONS 

FIGURE  PAGE 

38.  Land  Values  on  Lawrence  Avenue,  1910,  1928,  1931        .....  251 

39.  Land  Values  of  the  Principal  Business  Corners  outside  the  Loop,  1910  .  253 

40.  Land  Values  of  the  Principal  Business  Corners  outside  the  Loop,  1928   .  254 

41.  Original  Subdivisions,  1880-1932      ...........  256 

42.  Residential  Land  Values  per  Front  Foot,  1926      .......  259 

43.  Land  Values  for  Each  Square-Mile  Section,  1928  .......  260 

44.  Extent  of  the  Settled  Area  in  1926  ...........  262 

45.  Increase  in  Land  Values,  1918-28    ...........  263 

46.  Extensions  to  Surface  and  Elevated  Lines,  1903-32    ......  264 

47.  Residential  Land  Values  per  Front  Foot,  1931      .......  267 

48.  Factors  in  the  Chicago  Real  Estate  Depression,  1926-33      ....  270 

49.  The  Decline  in  the  Number  of  Chicago  Banks  outside  the  Loop,  1929- 

33      •      •      •  271 

50.  Comparison  of  Ground  Area  Occupied  by  the  Houses  and  Yards  of  Rich 

and  Poor  Families  in  Chicago,  1886       ..........  289 

51.  Air  Space  Occupied  by  Buildings  in  Chicago,  1933     ......  293 

52.  Extension  of  Area  Occupied  by  High-  Grade  Residential  or  Apartment 
Buildings,  1833-1933  ...............  303 

53.  Fluctuations  in  the  Value  of  Fashionable  Residential  Land,  1865-1933  305 

54.  Land  Values  in  Outlying  High-Grade  Areas  Developed  after  1900  .      .  306 

55.  Residential  Land  Values,  One  Block  North  of  Division  Street,  Lake 
Michigan  to  Laramie,  1910  and  1928     ..........  308 

56.  Residential  Land  Values,  South  Side,  between  Fifty-fifth  and  Fifty- 
sixth  Streets  from  Lake  Michigan  to  Crawford  Avenue,  1910  and  1928  309 

57.  Fluctuations  in  the  Value  of  Cheap  Residential  Land,  Chicago,  1890- 


58.  Area  Occupied  by  Predominant  Racial  or  Nationality  Groups,  1933     .  315 

59.  Land  Values  in  Old  Areas  Settled  before  1873  ........  318 

60.  Extension  of  Area  Occupied  by  Manufacturing  and  Industrial  Buildings, 
1833-1933    ..................  319 

61.  Industrial  Land  Values,  1931      ............  321 

62.  Land  Values  on  State  Street,  Chicago  Avenue  to  Fifty-fifth  Street,  1873, 
1910,  1928  ..................  323 

63.  Land  Values  on  Madison  Street,  State  Street  to  Central  Avenue,  1873, 
1910,  1928  ..................  324 

64.  Land  Values  on  Michigan  Avenue,   Chicago  Avenue  to  Fifty-fifth 
Street,  1873,  1910,  1928    ..............  325 

65.  Land  Values  on  North  Clark  Street,  Roosevelt  Road  to  Lawrence 
Avenue,  1873,  1910,  1928       .............  326 

66.  The  Relationship  between  Store  Rents  and  Pedestrian  Traffic  Counts  327 

67.  Land  Values  on  Cottage  Grove,  Halsted,  and  Cicero  Avenues,  1928       .  328 

68.  Land  Values  on  Milwaukee  Avenue,  1910  and  1928   ......  329 

69.  Land  Values  on  Sixty-third  and  Seventy-ninth  Streets,  Stony  Island  to 
Crawford  Avenues,  1928  ..............  330 


LIST  OF  ILLUSTRATIONS  xxv 

PAGE 

70.  Air  Space  Occupied  by  Buildings  in  the  Central  Business  District, 
Chicago,  1836,  1873,  1893,  1923,  1933 332 

71.  Maps  of  Part  of  the  Central  Business  District  of  Chicago  for  the  Periods 
1830,  1836,  1854-56,  and  1870-73 -7 -  -  .     338 

72.  Maps  of  Part  of  the  Central  Business  District  of  Chicago  for  the  Periods 
1896,  1909-13,  1925-28,  and  1931 339 

73.  Land  Values  in  the  Central  Business  District  of  Chicago  for  the  Years 
1830,  1836,  1856,  1873 340 

74.  Land  Values  in  the  Central  Business  District  of  Chicago  for  the  Years 
1894,  1910,  1928,  1931 341 

75.  Land  Values  in  the  Central  Business  District  of  Chicago  for  the  Years 
1910,  1921,  1928,  1931  (Depth  of  zoo  Feet) 342 

76.  The  Trend  of  Chicago  Land  Values,  Population,  and  Manufacturing, 

i835-i933 348 

77.  Chicago  Land  Values  in  Current  Dollars  and  in  Values  Corrected  for 
Changes  in  Wholesale  Prices,  Wages,  and  Interest  Rates      ....     349 

78.  The  Interest  Rate  on  Improved  Real  Estate  in  the  Central  Business  Dis- 
trict of  Chicago  Compared  with  the  Yield  on  Rail  Bonds,  1833-1933     .     349 

79.  Miles  of  New  Pavements  Constructed  Annually  in  Chicago,  1855-1932    350 

80.  The  Rate  of  Increase  of  Chicago  Land  Values,  1830-1933,  Compared 
with  the  Rate  the  Total  Land  Values  of  Each  Peak  Period  Would  Have 
Increased  at  5  Per  Cent  and  6  Per  Cent  Compound  Interest  .      .      .      .     352 

81.  The  Population  Growth  of  Chicago  by  Two-Mile  Zones,  1830-1930     .     356 

82.  Percentage  of  Increase  or  Decrease  of  Population  of  Chicago  by  Census 
Tracts,  1920-30 357 

83.  Population  per  Square  Mile  in  Section  from  Ashland  to  Halsted  from 
Fullerton  to  Pershing  Road,  1850-80 358 

84.  Population  per  Square  Mile  in  Sections  from  Ashland  to  Halsted  from 
Touhy  on  North  to  One  Hundred  and  Twenty-seventh  Street  on  South, 
1890,  1910,  1930 359 

85.  Residential  Land  Values,  One  Block  East  of  Ashland  Avenue  from 
Howard  Street  on  North  to  One  Hundred  and  Twenty-seventh  Street 

on  South,  1910  and  1928 359 

86.  Population  Density  per  Square  Mile  for  a  Zone  of  Land  Extending  along 
the  Lake  from  the  Northern  to  the  Southern  Limits  of  Chicago,  1840- 

1930 360 

87.  Land  Values  per  Acre  for  a  Zone  of  Land  Extending  along  the  Lake 
from  the  Northern  to  the  Southern  Limits  of  Chicago,  1836-1928   .      .     361 

88.  Chicago  Land  Values,  1830-1933  (semi-log,  scale) 362 

89.  Chicago  Land  Values,  1830-1933  (natural  scale) 363 

90.  The  Chicago  Real  Estate  Cycle.  Fluctuations  of  Per  Capita  Land 
Values,  Per  Capita  Annual  New  Construction  Costs,  and  Annual  Popu- 
lation Increase  above  and  below  the  Average  Figures  for  the  Cycle 
Period 370 


xxvi  LIST  OF  ILLUSTRATIONS 

FIGURE  PAGE 

91.  Population  and  Residential  Land  Values  in  Various  Sections  of  Chicago, 
1900-1933 371 

92.  The  Relation  between  Increase  in  Rents  per  Room  and  Increase  in  Oper- 
ating Expenses  in  Steam-heated  Apartments,  Chicago,  1933     .      .      .     380 

93.  Volume  of  New  Construction  in  Chicago,  1854-1932       .     .     .      .      .     382 

94.  Volume  of  Subdividing  in  Chicago,  1830-1932      ;     .    v     .      .      .      .     389 

95.  Volume  of  Real  Estate  Conveyances  in  Cook  County,  Illinois,  1869-1932     396 

96.  The  Rise  in  Chicago  City  Taxes  and  Special  Assessments,  1865-1931     .     397 

97.  The  Chicago  Real  Estate  Cycle,  1830-1933  (factors  on  a  semi-log, 
scale) ;     .     .>'   .     ...     406 

98.  Chicago  Per  Capita  Land  Values  Compared  with  Wholesale  Prices, 
Wages  of  Unskilled  Labor,  and  Rail  Stock  Prices  in  the  United  States, 
1831-1933         410 

99.  The  Chicago  Land- Value  and  Building  Cycles  Compared  with  General 
Business  Activity  in  the  United  States,  1830-1933 411 

100.  The  Chicago  Land- Value  and  Real  Estate  Transfer  Cycles  Compared 
with  the  Cycle  of  Chicago  Manufacturing,  1866-1933 412 

101.  The  Chicago  Land- Value  and  Subdivision  Cycles  Compared  with  the 
Cycle  of  Chicago  Bank  Clearings,  1830-1933 413 

102.  The  Chicago  Land- Value  Cycle  Compared  with  the  Cycles  of  Wholesale 
Commodity  Prices,  Canal-Rail  Stock   Prices,  and  Industrial  Stock 
Prices,  1830-1933 414 

103.  Various  Methods  of  Subdividing  a  Forty- Acre  Tract       .     .      .      .      .     431 


LIST  OF  TABLES 

TABLE  PAGE 

I.  Population  of  Chicago  by  Wards,  1837-45 51 

II.  Value  of  New  Buildings  Erected  in  Chicago  by  Years,  1864-70      86 

III.  Chicago  Land  Values  by  Mile  Zones  from  State  and  Madison 
Streets,  1836-79 116 

IV.  The  Growth  of  Chicago,  1877-83,  as  Indicated  by  Bank  Clear- 
ings, Number  Employed  in  Manufactures,  Total  Trade,  and 
Population 129 

V.  Value  of  Chicago  Land  by  Principal  Uses,  1876-83       .      .      .     140 

VI.  Chicago  Manufactures,  1884-93,  Showing  Number  of  Wage- 
Earners,  Amount  of  Wages  Paid,  and  Value  of  Product     .      .     144 

VII.  Value  of  Chicago  Land  by  Principal  Uses,  1879-91       ...     175 
VIII.  Value  of  Properties  Sold  at  Judicial  Sales  in  Chicago,  1892-99     181 

IX.  Number  of  Persons  over  Ten  Years  of  Age  in  Gainful  Occupa- 
tions in  Chicago,  1910-30 200 

X.  Rents  per  Month  of  Selected  Old  Houses  in  Chicago,  1892, 

1897,  and  1908 216 

XL  Annual  Amount  of  Bank  Clearings,  Manufactures,  Wholesale 

and  Produce  Trade  in  Chicago,  1908-18 222 

XII.  Annual  Volume  of  Real  Estate  Transfers,  New  Buildings,  Lots 

Subdivided,  and  Long-Term  Leases  in  Chicago,  1908-18  .      .     222 

XIII.  Value  of  New  Office  Buildings  Erected  Annually  in  Chicago 
Compared  with  Total  New  Construction,  1908-15  .      .      .      .     224 

XIV.  Number  and  Cost  of  New  Apartment  Buildings  Compared 
with  New  Single-Family  Residences  Constructed  in  Chicago, 
1910-15 231 

XV.  Land  Values  in  Apartment  Areas  in  Chicago,  1910-28        .      .     246 
XVI.  Land  Values  in  Bungalow  Areas  in  Chicago,  1910-28    .      .      .     246 

XVII.  Value  of  Residential  Land  in  Old  Settled  Areas  Occupied  by 

Medium-Grade  Homes 247 

XVIII.  Value  of  Land  in  Industrial  Areas,  1910-29 248 

XIX.  Value  of  Land  at  Principal  Outlying  Business  Corners  of 

Chicago,  1910-29 252 

XX.  Average  Value  of  the  Land  at  425  Street-Car  Intersections  in 

Chicago,  1910-29 255 

xxvii 


xxviii  LIST  OF  TABLES 

TABLE  PAGE 

XXI.  Value  of  Land  by  Principal  Areas  and  Types  of  Use  in  Chicago, 
1910  and  1928,  Compared  with  Population  Growth,  1910  and 
1930 /  .  . 261 

XXII.  Decline  in  Pay-Rolls  in  Chicago  Manufacturing  Industries  by 

Months  from  October,  1929,  to  May,  1933 268 

XXIII.  Decline  in  Employment  and  in  Pay-Rolls  in  Chicago  Manufac- 
turing Industries,  1929-33  .      ,     ,     . 269 

XXIV.  .Average  Reduction  in  Full  Value  of  Land  for  Assessment  Pur- 

poses for  1931  as  Compared  with  1928  Full  Value  According  to 

the  Relative  Value  of  the  Land 274 

XXV.  Population  of  Chicago  and  Other  Leading  Cities  in  the  Middle 

West,  1840-1930 280 

XXVI.  Population  of  Chicago  and  Seaboard  Cities,  1840-1930      .      .     281 

XXVII.  Relative  Increase  in  Population  of  Eleven  Leading  American 

Cities,  1850-1930 281 

XXVIII.  Relative  Increase  in  Population  of  Thirteen  Leading  American 

Cities,  1900-1930 282 

XXIX.  Population  of  Some  Cities  in  the  Chicago  Suburban  Area  and 

Population  of  the  Chicago  Suburban  Area,  1900-1930  .      .      .     282 

XXX.  Sources  of  Increase  of  Chicago  Population,  1830-1930        .      .     284 

XXXI.  Percentage  of  Total  Increase  of  Chicago  Population  Coming 

from  Each  Source,  1860-1930 284 

XXXII.  Number  of  Buildings  in  Chicago  Compared  with  Population  at 

Intervals  from  1825  to  1928 286 

XXXIII.  Utilization  of  Land  in  Chicago,  1850,  1870,  1890,  and  1911     .     290 

XXXIV.  Utilization  of  Land  in  Chicago  in  1923 290 

XXXV.  Number  of  Buildings  in  Cook  County  by  Principal  Types,  1928     291 

XXXVI.  Square  Feet  of  Building  Space  at  Various  Height  Levels  in 

Cook  County,  1928 292 

XXXVII.  Percentage  of  Total  Rented  Homes  of  Each  Group  in  Chicago 

Falling  within  Given  Rental  Class,  1932 316 

XXXVIII.  Percentage  of  Cubic  Feet  at  Given  Heights  to  Total  Cubic 

Feet  in  Area  (Central  Business  District) 331 

XXXIX.  Percentage  of  Air  Space  at  Different  Heights  Occupied  by 

Buildings  (Central  Business  District) 331 

XL.  Cubic  Feet  of  Space  above  the  Blocks  in  the  Central  Business 

District  of  Chicago v 331 


LIST  OF  TABLES  xxix 

TABLE  PAGE 

XLI.  Cubic  Contents  of  Buildings  in  Chicago  Central  Business  Dis- 
trict by  Age  Groups  (Including  Basement  Area)  .  .  .  .335 

XLII.  Principal  Types  of  Uses  of  Central  Business  District  of  Chicago    336 

XLIII.  Land  Values  in  Central  Business  District  and  Entire  Area  of 

Chicago  Compared,  1836-1926 337 

XLIV.  Land  Values  on  North-South  Streets  in  the  Central  Business 

District  of  Chicago,  1830-1931 345 

XLV.  Value  of  Land  hi  Chicago  by  Principal  Types  of  Uses,  1910-33    347 

XLVI.  Index  Numbers  of  Chicago  Land  Values  by  Principal  Types  of 

Uses 347 

XL VII.  The  Amount  to  Which  the  Sales  Value  of  Chicago  Land  at  Dif- 
ferent Periods  Would  Have  Grown  at  6  Per  Cent  Compound 
Interest 354 

XL VIII.  The  Rise  in  Chicago  Land  Values  Compared  with  the  Growth  of 

Land  Values  at  6  Per  Cent  Compound  Interest 355 

XLIX.  Percentage  of  Increase  in  the  Population  of  Chicago  for  Equal 

Time  Intervals  in  Booms  and  Depressions 373 

L.  Rents  of  Workingmen's  Dwellings  and  Office  Buildings  in 

Chicago 377 

LI.  Rate  of  Population  Increase  and  Rate  of  Increase  in  Rents  of 
Office  Buildings  and  Workingmen's  Dwellings  in  Chicago,  1915- 

33        378 

LII.  Gross  Income,  Total  Expense  (Including  Taxes  and  Deprecia- 
tion) and  Net  Income  of  a  Chicago  Office  Building,  1918-32  .  379 

LIII.  Seventy-nine  Years  of  Building  in  Chicago,  1854-1932     .      .     384 

LIV.  Index  Numbers  of  Population,  Office  Rents,  New  Construc- 
tion, Number  of  Lots  Subdivided,  and  Aggregate  Land  Values 
in  Chicago,  1918-27 384 

LV.  Index  Numbers  of  Population,  Building,  Number  of  Lots  Sub- 
divided, and  Land  Values  in  Chicago,  1885-93 385 

LVI.  The  Amount  of  Money  Loaned  on  Mortgages  and  Trust  Deeds 

in  Cook  County,  Illinois,  1918-32 386 

LVII.  Increase  in  Annual  Cost  of  Special  Assessments  in  Chicago, 

1862-71,  for  Years  Ending  April  i 394 

LVIII.  Increase  in  Annual  Cost  of  Special  Assessments  in  Chicago, 

1877-92 394 

LIX.  Rise  in  Annual  Amounts  of  Special  Assessments  in  Chicago, 

1919-27 395 


xxx  LIST  OF  TABLES 

TABLE  PAGE 

LX.  Decrease  in  Annual  Cost  of  Special  Assessments  in  Chicago, 

1870-77     .   ,.-- ;•'.: •-:-....•-.  •.  •   . .     .      .      .     395 

LXI.  Decrease  in  Annual  Cost  of  Special  Assessments  in  Chicago, 

1892-97    .     .-^ ,    t.     .     .     ...     395 

LXII.  Decrease  in  Annual  Cost  of  Special  Assessments  in  Chicago, 

1927-32  .  ., ;       ......  398 

LXIII.  Rents,  Value  of  New  Buildings,  Transfers,  Number  of  Lots 
Subdivided,  Number  of  Foreclosures,  Vacancies  in  the  Central 
Business  District,  Land  Values  in  Chicago,  1926-33  .  .  .  399 

LXIV.  The  Percentage  Increase  of  Factors  Affecting  Chicago  Real 

Estate  in  Boom  Periods      .      .      .      .     .     .     .    ''.     .     .      .     404 

LXV.  The  Percentage  Decrease  of  Factors  Affecting  Chicago  Real 

Estate  in  Depression  Periods 405 

LXVI.  Sequence  of  Factors  in  the  Chicago  Real  Estate  Cycle,  as  Indi- 
cated by  Deviations  above  and  below  the  Normal  Trend  .  .  408 

LXVII.  Average  Time  Intervals  in  the  Chicago  Real  Estate  Cycle 

(Years)     .     .     .     ......     .     .     . 409 

LXVIII.  A  Comparison  of  Fluctuations  of  Chicago  Real  Estate  Factors 
above  and  below  Normal  with  Fluctuations  in  General  Busi- 
ness Factors 415 

LXIX.  Year  in  Which  Major  Peaks  Occurred  in  Chicago  Land  Values 
Compared  with  Major  Peaks  in  Wholesale  Prices,  Canal-Rail 
Stock  Prices,  and  Industrial  Stock  Prices 420 

LXX.  Year  in  Which  the  Maximum  Point  of  Depression  Occurred  for 
Chicago  Land  Values  Compared  with  Maximum  Depression 
Points  for  Wholesale  Prices,  Canal-Rail  Stock  Prices,  and  In- 
dustrial Stock  Prices 420 

LXXI.  Lot  and  Block  Dimensions  of  Original  Subdivisions  in  or  near 

the  Present  Loop 428 

LXXII.  Lot  and  Block  Dimensions  of  Outlying  Subdivisions  of  1836-37    429 

LXXIII.  Aggregate  Land  Value  under  Different  Subdivision  Plans  and 

Depth  Rules  .     ....     .     .,    .     .     .     ...     .      .     430 

LXXIV.  Estimated  Corner  Premiums  of  Lots  in  the  Central  Business 

District  of  Chicago  .      .     ..*,.,     .     .      .      .      .     433 

LXXV.  Effect  of  Doubling  the  Number  of  Corners  upon  Aggregate 

Land  Values  ...     .     . 433 

LXXVI.  Number  of  Guaranty  Orders  Taken  by  the  Chicago  Title  and 

Trust  Company,  1911-33.       .     .     .     .     .      .    .,      .      .      .     434 


LIST  OF  TABLES  xxxi 

TABLE  PAGE 

LXXVII.  Guaranty  Orders  of  the  Chicago  Title  and  Trust  Company 

Compared  with  Abstract  Orders 435 

LXXVIII.  Relation  between  the  Rise  and  Fall  of  Gross  and  Net  Rents    454 

LXXIX.  Land  Value  Developed  on  a  5o-by-i5o-Foot  Lot  in  Chicago  by 

Different  Types  of  Residential  Uses,  1926 455 

LXXX.  Aggregate  Value  of  the  211  Square  Miles  of  Land  in  the  1933 

Corporate  Limits  of  Chicago,  1833-1933 470 

LXXXI.  Number  of  Instruments  Recorded  in  Cook  County,  1872-1932    470 

LXXXII.  Total  Consideration  in  Deeds  Recorded  in  Cook  County,  1868- 

1902 ....     472 

LXXXIII.  Number  of  Transfers  in  Cook  County,  1901-33       ....     472 
LXXXIV.  New  Mortgages  and  Trust  Deeds,  Cook  County,  Illinois,  1896- 

1933 473 

LXXXV.  Consideration  Stated  in  Deeds  for  Transfers  of  Property  More 
than  Seven  Miles  from  the  Courthouse  Compared  with  the 
Total  Consideration  in  All  Deeds  in  Cook  County,  1889-1901  473 

LXXXVI.  Annual  Amount  of  New  Construction  in  Chicago,  1854-1933   .     474 

LXXXVII.  Number  of  Different  Types  of  Buildings  Erected  Annually, 

1912-33 476 

LXXXVIII.  Index  Numbers  of  Rents  of  Workingmen's  Dwellings  in  Chi- 
cago, 1914-33 476 

LXXXIX.  Number  of  Lots  Subdivided  Annually  in  Cook  County  and  the 

Chicago  Metropolitan  Area,  1874-1930 477 

XC.  Approximate  Number  of  Acres  Subdivided  Annually  in  the 

1931  City  Limits  of  Chicago,  1830-1932 479 

XCI.  Value  of  Manufactures,  Wholesale  Trade,  Produce  Trade,  To- 
tal Trade  of  Chicago  (Gold),  1850-1931 481 

XCII.  Percentage  of  Vacancies  in  Chicago  Office  Buildings,  1926-33  482 
XCIII.  Population  of  Chicago  (Present  City  Limits),  1830-1932  .  .  483 
XCIV.  Distribution  of  Chicago  Population  by  Mile  Zones,  1860-1916  484 

XCV.  Number  of  Passenger  Automobiles,  Motor  Trucks,  and  Horse- 
drawn  Vehicles  Registered  in  Chicago,  1910-33       ....     485 

XCVI.  Value  of  Property  Placed  under  Long-Term  Leases  and  Sold 
at  Judicial  Sale  at  the  Chicago  Real  Estate  Board  Annually, 
1890-1928 486 

XCVII.  Assessment  of  Real  Estate  in  Chicago,  1837-1932   ....     487 


xxxii  LIST  OF  TABLES 


PAGE 


XC  VIII.  Chicago  Tax  Levy,  1837-1931 488 

XCIX.  Bank  Clearings  in  Chicago  by  Years  from  1865  to  1933      .      .  489 

C.  Illinois  Bell  Telephone  Company  Stations  in  Chicago  at  End  of 

Each  Year,  1882-1933 49° 

CI.  Number  of  Passengers  Carried  by  Chicago  Rapid  Transit  Com- 
pany for  Years  Ending  on  December  31,  1892-1932      .      .      .  491 

CII.  Annual  Cost  of  Special  Assessments,  1862-1932     ....  492 

CIII.  Electricity  Generated  and  Sold  in  Chicago  by  the  Common- 
wealth Edison  Company,  1893-1931 493 


PART  I 

HISTORY  OF  THE  RELATION  OF  THE  GROWTH  OF 

CHICAGO  TO  THE  RISE  IN  ITS  LAND  VALUES, 

1830-1933 


CHAPTER  I 
THE  CANAL  LAND  BOOM,  183(M2 

A.  INTRODUCTION:  OBJECTIVES  or  THE  STUDY 
The  growth  of  Chicago  from  a  hamlet  of  a  dozen  log  huts  in  1830 
into  an  urban  agglomeration  with  a  greater  population  in  211  square 
miles  in  1930  than  is  contained  in  825,000  square  miles  in  eight  Ameri- 
can states1  prompts  the  historian  to  trace  the  development  of  this  city 
from  its  village  embryo.  The  rise  of  the  ground  value  of  that  211  square 
miles  from  a  few  thousand  to  five  billion  dollars — an  amount  over  three 
hundred  times  as  great  as  the  purchase  price  of  the  375,000,000  acres  in 
the  Louisiana  purchase  in  1803  and  slightly  more  than  the  aggregate 
value  of  all  the  farm  land  in  twenty- three  American  states  in  192  5* — 
invites  the  student  of  urban  land  values  to  investigate  the  humble  be- 
ginnings of  this  world-metropolis.  The  very  rapidity  of  the  growth  and 
the  present  magnitude  of  Chicago  induce  a  searching  analysis  of  the 
causes  for  the  rise  of  this  city  at  the  juncture  of  the  Chicago  River  and 
Lake  Michigan. 

The  uneven  character  in  the  rate  of  growth  of  the  buildings  and  the 
land  values  of  Chicago  during  the  dynamic  era  of  the  American  indus- 
trial revolution  is,  however,  of  greater  significance  in  the  study  of  eco- 
nomic and  social  changes  than  great  size  or  huge  land  values.  Chicago's 
physical  growth  in  buildings  has  not  proceeded  at  a  steady,  even  pace 
through  the  century,  but  by  fits  and  starts.  Periods  of  feverish  activity 

1  The  population  of  Chicago  in  1930  was  3,376,  436.  The  combined  population  of  Ari- 
zona, Idaho,  Montana,  Nevada,  New  Mexico,  North  Dakota,  Utah,  and  Wyoming,  with 
an  area  of  825,534  square  miles  was  3,346,843  in  1930  (U.S.  Census,  1930). 

2  The  value  in  1925  of  243,330,000  acres — all  the  farms  in  the  following  states  was 
$4,956,206,000:  Maine,  New  Hampshire,  Vermont,  Massachusetts,  Rhode  Island,  Con- 
necticut, Kentucky,  Tennessee,  Alabama,  Mississippi,  Montana,  Idaho,  Wyoming,  Colo- 
rado, New  Mexico,  Arizona,  Utah,  Nevada,  New  Jersey,  Delaware,  Maryland,  West  Vir- 
ginia, Virginia.  These  are  the  poorest  agricultural  states.  The  value  of  the  farm  land  in 
these  states  was  only  a  small  part  of  the  value  of  all  farms  in  the  United  States,  which  was 
$55,000,000,000  in  1920  (U.S.  Census,  1920;  Statistical  Abstract  of  the  U.S.,  1932,  pp.  574- 
75).  The  value  of  all  land  in  the  United  States  in  1922  was  estimated  at  $122,000,000,000 
by  the  Federal  Trade  Commission  (National  Wealth  and  Income  [69th  Cong.,  ist  sess.; 
Washington,  1926],  Senate  Doc.  126,  p.  34). 

3 


4  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

in  which  the  whole  city  seemed  to  be  possessed  with  a  rage3  to  recon- 
struct its  business  center  and  to  cover  the  adjacent  prairie  with  houses 
or  flats,  were  followed  by  periods  in  which  the  new  growth  was  so  slow 
as  to  be  almost  imperceptible.  Similarly,  Chicago  land  values  did  not 
rise  with  the  uniform  precision  of  a  compound-interest  table.  Brief 
intervals  of  a  year  when  land  values  in  certain  quarters  advanced 
1,000  per  cent  were  succeeded  by  years  of  dulness  and  painfully  slow, 
declining  values.  These  changing  moods  of  the  city  furnish  materials 
for  a  research  in  social  psychology,  and  their  analysis  also  illustrates 
the  actual  nature  of  city  growth  and  the  real  behavior  of  an  urban 
land  market  in  a  rapidly  growing  city. 

The  character,  as  well  as  the  rate  of  growth  of  Chicago,  presents 
startling  contrasts.  Expanding  vertically  in  taller  buildings  as  well  as 
laterally  into  the  prairie,  spreading  out  solidly  from  the  center  and 
also  in  gangling  lines  and  in  detached  settlements  flung  out  in  advance 
of  the  main  body,  its  physical  development  was  far  from  uniform. 
"  Chicago  is  at  once  a  metropolis,  a  collection  of  villages  and  a  howling 
wilderness,"  said  one  observer  in  the  eighties.4  Within  the  city  limits 
of  Chicago  in  1933  there  are:  first,  a  business  center  with  forty-story 
skyscrapers  beside  which  old  six-story  (and  smaller)  buildings  humbly 
squat;  second,  an  intermediate  belt  in  which  old,  fashionable  resi- 
dences are  found  side  by  side  with  factories  and  warehouses,  or  in 
which  acres  of  frame  hovels  are  packed  closely  together;  third,  a  fringe 
of  tall  apartment  buildings  along  the  Lake  Shore;  fourth,  outlying  areas 
that  have  independent  towns  or  community  centers,  some  coalescing 
with  one  another  and  others  separated  by  tracts  of  prairie;  and,  fifth, 
square-mile  sections  covered  with  grass  and  lot  stakes  as  reminders  of 
speculative  losses  in  which  there  is  not  a  solitary  inhabitant.  In  such 
a  variegated  urban  pattern  land  values  vary  in  1933  from  $1,000  to 
$20,000,000  an  acre,  and  there  are  cases  where  the  range  is  from  $50 
to  $10,000  a  front  foot  within  a  distance  of  200  feet. 

Two  processes  are  the  subject  matter  of  this  study.  The  one,  the 
physical  growth  of  the  city  as  measured  by  new  buildings,  public  im- 
provements, and  transportation  lines,  is  visible  to  the  eye.  The  other, 
the  growth  and  shifting  of  the  structure  of  land  values,  cannot  be  seen, 

3  Balzac  in  his  novel  Ferragus  describes  Paris  as  a  monster  with  a  thousand  moods,  one 
of  these  moods  being  a  rage  for  building. 

*  Mr.  Adler  quoted  to  this  effect  in  the  Chicago  Tribune,  February  19,  1888. 


THE  CANAL  LAND  BOOM  5 

but  in  our  society,  dominated  by  the  profit  motive,  it  enters  into  nearly 
every  building  project.  Except  in  cases  where  land  is  used  for  sign- 
boards or  parking  space,  an  income  can  be  derived  from  an  urban  site 
only  by  erecting  a  building  upon  it.  Therefore  a  close  relationship 
might  be  expected  to  exist  between  the  physical  growth  of  a  city  and 
changes  in  its  land  values.  The  exact  character  of  the  kinship  between 
the  two  sets  of  forces  is  not  a  simple  one,  and  can  be  determined  only 
by  an  analysis  of  their  behavior  in  the  past. 

The  reader  may  wonder  whether  a  consideration  of  the  unique 
combination  of  events  that  produced  Chicago  will  lead  to  the  formula- 
tion of  any  principles  of  universal  validity.  If  this  fortuitous  chain  of 
events  is  not  likely  to  be  repeated  in  the  future,  the  knowledge  of  the 
sequence  of  these  exceptional  causes  and  effects  wih1  not  give  one  a 
physical  law,  in  which  a  given  set  of  mechanical  forces  set  in  motion  can 
be  relied  upon  to  produce  substantially  the  same  effect.  In  the  history 
of  a  city  there  are  elements  similar  to  that  found  in  the  biography  of  a 
man.  An  extraordinary  combination  of  hereditary  factors,  likely  never 
again  to  be  exactly  repeated,  placed  in  a  historical  situation  that  is  also 
a  unique  complex  of  men  and  events,  produces  a  type  of  human  be- 
havior which  may  not  be  duplicated.  In  the  thousands  of  little  com- 
munities in  a  great  city,  there  are  local  events  that  have  an  interest 
chiefly  for  those  who  have  passed  their  lives  amid  the  surroundings  de- 
scribed and  which  have  the  unique  attributes  of  individual  men  and 
women.  Land  values  reflect  the  influence  of  factors  that  are  confined 
to  the  radius  of  a  block  or  a  precinct  in  a  city  ward,  and  this  study 
therefore  necessarily  deals  with  topics  that  are  as  narrow  in  scope  as 
the  history  of  an  obscure  family  or  of  one  of  the  thousands  of  common- 
place apartment  blocks. 

A  study  of  an  entire  city  during  the  whole  period  of  its  growth,  how- 
ever, discloses  a  vision  that  might  escape  the  glance  of  one  whose  hori- 
zon was  limited  by  his  precinct.  The  broad  sweep  of  the  events  of  a 
century  reveals  recurring  cycles  in  the  growth  of  Chicago  in  which 
general  moods  or  similar  historical  situations  are  to  a  certain  extent  re- 
peated. Each  of  the  five  chapters  in  the  first  part  of  this  work  deals 
with  a  complete  cycle,  which  passes  through  somewhat  the  same  phases. 
It  is  possible  that  this  long-run  study  of  one  city  will  lead  to  the  dis- 
covery of  factors  that  are  characteristic  of  real  estate  activity  in  other 
cities,  if  allowances  are  made  for  inevitable  differences  in  local  histories 


6  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

and  local  environments.  Inasmuch  as  local  forces  are  at  least  as  im- 
portant as  national  or  international  factors  in  the  determination  of  the 
land  values  of  a  community,  the  nature  of  the  urban  land  market  can 
be  learned  only  by  the  study  of  one  or  more  of  these  local  markets  for  a 
period  of  time  long  enough  to  cover  cycles  that  are  sometimes  of  thirty- 
five  years'  duration.  A  general  survey  of  a  number  of  cities  for  a  short 
period  of  time  might  conceivably  yield  less  material  for  the  formulation 
of  general  laws  of  urban  land  values  than  the  investigation  of  the  behav- 
ior of  land  values  in  one  city  during  the  entire  period  of  its  history. 

For  the  growth  of  a  city  is  a  cumulative  as  well  as  a  cyclical  process. 
Each  successive  building,  railroad  line,  street-car  line,  or  park  leaves  a 
permanent  impress  upon  the  character  of  the  city.  A  pattern  begins  to 
form  at  the  very  outset  that  with  the  lapse  of  time  acquires  a  certain 
rigidity.  The  railroad  or  park  system  once  laid  down  holds  its  position 
through  great  changes.  The  physical  character  of  the  city  is  altered  by 
the  imposition  of  new  elements,  but  the  effect  of  the  early  direction  of 
its  growth  and  of  buildings  that  have  long  since  vanished  is  never  en- 
tirely lost.  Similarly,  the  present  magnitude  and  distribution  of  land 
values  within  the  city  is  the  summation  of  a  historical  process  and  the 
final  result  of  a  long  evolution.  In  the  first  part  of  this  book  is  a  descrip- 
tion of  the  manner  in  which  different  sections  of  the  city  became  de- 
voted to  certain  types  of  uses,  or  in  which  they  came  to  be  occupied  by 
certain  social  classes,  races,  or  nationality  groups.  In  other  words,  it 
is  an  account  of  how  those  dominant  characteristics  of  different  Chi- 
cago neighborhoods  which  vitally  affect  land  values  were  themselves 
determined. 

In  the  second  part  of  this  work  the  principal  factors  in  this  one  hun- 
dred years  of  growth  that  can  be  measured  are  presented  in  graphs  and 
charts,  and  local  indices  of  land  values,  population  growth,  trade,  and 
manufactures  are  compared  with  one  another  and  with  the  curves  of 
wholesale  prices,  stock  prices,  wages,  and  interest  rates  for  the  entire 
United  States.  In  this  latter  section,  also,  the  many  different  unique 
and  local  factors  affecting  the  values  of  land  for  the  leading  types  of 
uses  are  analyzed  from  the  perspective  of  a  century  of  dynamic  change. 
Thus  the  attempt  is  made  to  consider  the  qualitative  as  well  as  the 
quantitative  facts  of  the  Chicago  land  market,  and  to  seek  to  discover 
the  laws  of  the  behavior  of  social  and  economic  factors  governing 
urban  land  values. 


THE  CANAL  LAND  BOOM  7 

B.    THE  CAUSES  OF  THE  EARLY  GROWTH  OF  CHICAGO 

The  portage. — The  glorious  destiny  of  Chicago  was  perhaps  foreseen 
by  the  French  explorer,  Joliet,  when  he  visited  its  site,  over  one  hun- 
dred and  sixty  years  before  its  first  land  boom.5  The  pioneers  of  empire 
hunted  for  such  a  spot  before  they  had  ever  seen  it,  and  during  the 
many  decades  that  intervened  between  its  first  discovery  and  its  actual 
settlement  the  advantages  of  its  site  entered  into  the  calculations  of 
ministers  in  the  capitals  of  Europe.  Its  location  was  carefully  marked 
on  the  maps  of  North  America  as  a  place  of  strategic  importance  by 
those  who  had  never  caught  a  glimpse  of  the  dismal  swamp  that 
seemed  to  belie  all  promise  of  future  greatness. 

The  reason  for  the  fortunate  position  of  Chicago  could  be  traced 
back  a  million  years  to  the  Ice  Age  when  the  glaciers  scoured  out  Lake 
Michigan  but  did  not  cut  a  channel  deep  enough  to  turn  the  waters  of 
the  Great  Lakes  permanently  into  the  Mississippi  Valley.  The  St. 
Lawrence  River  and  the  chain  of  Great  Lakes  formed  the  first  highway 
into  the  heart  of  America  from  the  East.  The  great  network  of  rivers 
that  emptied  into  the  Mississippi  was  the  first  road  to  penetrate  the 
interior  of  America  from  the  South.  Taken  together,  the  two  systems 
formed  a  huge  arc  around  the  English  settlements  on  the  Atlantic  sea- 
board, and,  if  properly  fortified,  would  have  formed  an  insuperable 
barrier  to  westward  expansion.  At  one  point  these  two  great  waterways 
almost  joined,  and  the  land  barrier  was  so  slight  that  it  was  the  route 
most  frequently  used  for  the  portage  between  them.  This  vital  spot 
was  Chicago. 

The  Desplaines  River  which  flows  into  the  Illinois  River,  a  tributary 
of  the  Mississippi,  runs  parallel  to  Lake  Michigan  for  a  considerable 
distance  not  more  than  ten  miles  west  of  it,  being  separated  from  it  by 
a  low  continental  divide  not  over  six  or  eight  feet  high.  The  first  white 
explorers,  Joliet  and  Marquette,  searching  for  just  such  a  place,  ob- 
served in  1673  that  even  this  land  passage  was  shortened  at  Chicago. 
There  the  main  channel  and  the  south  branch  of  the  Chicago  River  and 

5  Joliet,  in  1673,  made  a  verbal  report  on  the  possibility  of  a  canal  that  would  link  the 
Great  Lakes  with  the  Mississippi  River  System,  which  was  reported  by  Father  Dablon  as 
follows:  "The  fourth  remark  ....  is  that  we  can  quite  easily  go  to  Florida  in  boats,  and 
by  a  very  good  navigation.  There  would  be  only  one  canal  to  make  by  cutting  only  half 
a  league  of  prairie  to  pass  from  the  Lake  of  Illinois  [Lake  Michigan]  into  the  St.  Louis  River 
[the  Desplaines  and  Illinois]"  ("Relations"  of  Father  Dablon,  Historical  Magazine,  p.  237, 
cited  in  A.  T.  Andreas,  History  of  Chicago  [Chicago,  1884],  I,  165). 


LOCATION  OF  CHICAGO 
WITH  RESPECT  TO  WATER-WAY  SYSTEMS 


ELEVATIONS  ABOVE 
SEA  LEVEL 

ON  FEET) 
•B  OVER  900 
Egggj  700-800 


ELEVATIONS  ABOVE 


FIG.  i 


THE  CANAL  LAND  BOOM  9 

the  shallow  "Mud  Lake"  formed  during  spring  freshets  a  continuous 
waterway  from  Lake  Michigan  to  the  Desplaines  and  Illinois  rivers.6 
At  other  seasons  the  amount  of  dry  ground  over  which  canoes  had  to  be 
carried  varied  from  one  to  nine  miles.7  Across  this  portage  Indians 
traveled  in  their  canoes  before  the  coming  of  the  white  man,  and  here 
Indians  and  fur  traders  met  before  there  was  any  permanent  settle- 
ment.8 The  natural  advantages  of  the  Chicago  portage  suggested  to 
the  first  French  explorers  two  things:  first,  a  fort  that  would  control 
the  point  for  their  own  nation;  and,  second,  a  canal  that  would  make 
the  temporary  waterway  of  the  spring  freshets  a  permanent  year-round 
water  route  between  the  Great  Lakes  and  the  Gulf  of  Mexico. 

The  fort. — In  the  days  when  the  waterways  were  the  main  channels 
of  travel  from  the  seacoast  into  the  interior,  a  portage  such  as  the  one 
at  Chicago  was  a  gateway  through  which  invading  armies  as  well  as  fur 
traders  were  compelled  to  pass.9  Its  fortification  would  be  the  first  step 
of  any  power  seeking  the  military  control  of  the  surrounding  region. 

6  Pierre  Margry,  Decouvertes  et  etablissements  des  Franqais  dans  I'ouest  et  dans  le  sud  de 
VAmerique  septentrionale,  1614-1754  memoir  es  et  documents  originaux  (6  vols.;  Paris, '1876- 
86),  II,  165-67,  quoted  in  Robert  Knight  and  Lucius  H.  Zeuch,  Location  of  the  Chicago 
Portage  of  the  ijih  Century  (Chicago  Historical  Society,  1928),  pp.  21-22;  also  in  Good- 
speed  and  Healy,  History  of  Cook  County  Illinois  (Chicago,  1909),  I,  38.  Quoting  LaSalle 
in  his  Relations:  "This  [the  Chicago  portage]  is  an  isthmus  which  is  41  degrees,  50  minutes' 
elevation  from  the  pole  [Thirty-third  Street  and  Kedzie  Avenue]  on  the  west  of  the  Lake  of 
the  Illinois  [Lake  Michigan]  where  one  goes  by  a  channel  [Chicago  River]  formed  by  the 
junction  of  several  streams  or  gullies  of  the  prairie.  It  [the  Chicago  River]  is  navigable 
about  two  leagues  to  the  edge  of  this  prairie.  Beyond  this  at  a  quarter  of  a  league  distant 
toward  the  west  there  is  a  little  lake  [Mud  Lake]  a  league  and  a  half  in  length  which  is  di- 
vided in  two  by  a  beaver  dam.  From  this  lake  issues  a  little  stream  which  after  twining  in 
and  out  among  the  rushes  for  half  a  league  falls  into  the  Chicago  river  [the  Desplaines]  and 
from  there  into  the  river  of  the  Illinois.  When  this  lake  is  full  either  from  the  great  rains  in 
summer  or  from  the  floods  in  the  spring,  it  is  discharged  also  into  this  channel  which  leads 
to  the  Lake  of  the  Illinois  [Lake  Michigan]  whose  surface  is  seven  feet  lower  than  the  prairie 
where  is  situated  this  lake. 

"The  river  of  Chicago  [Desplaines]  does  the  same  in  the  springtime  when  its  channel  is 
full.  It  discharges  by  this  little  lake  a  part  of  its  water  into  the  Lake  of  the  Illinois,  and  at 
this  time  should  one  make  a  little  canal  of  a  quarter  of  a  league,  says  Joliet,  from  the  lake 
to  the  basin  which  leads  to  the  Illinois  river,  ships  could  in  the  summer  enter  into  the  river 
and  descend  into  the  sea." 

7  Jesuit  Relations  and  Allied  Documents,  Vol.  LIX,  n.  41,  quoted  in  Archer  Butler  Hul- 
bert,  Portage  Paths  (Cleveland:  Arthur  H.  Clark,  1903),  p.  181. 

8  Milo  M.  Quaife,  Chicago  and  the  Old  Northwest  (Chicago:  University  of  Chicago  Press, 
1913),  p.  21. 

9  The  military  advantages  of  portages  are  discussed  by  Hulbert  in  Historic  Highways 
of  America,  Vol.  VII;  Portage  Paths  (Cleveland,  1903),  pp.  51-82. 


io  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

The  Chicago  territory  was,  however,  too  far  removed  from  the  white 
settlements  of  the  eighteenth  century  to  induce  either  the  French  or  the 
British  to  post  a  garrison  there.  General  Anthony  Wayne  quickly  saw 
the  vital  importance  of  Chicago  in  1795  when  he  persuaded  the  United 
States  to  acquire  from  the  Indians  six  square  miles  at  the  mouth  of  the 
Chicago  River.10  Fort  Dearborn  was  accordingly  established  there  in 
1803  to  wean  away  the  Indians  from  the  influence  of  the  British  outpost 
at  Green  Bay.  The  presence  of  a  garrison  of  about  sixty  men  at  the 
fort  required  the  annual  visit  of  a  ship  to  bring  provisions,  which  took 
away  on  its  return  trip  furs  received  in  trade  from  the  Indians."  Ac- 
cordingly, under  the  protection  of  the  fort,  there  was  built  as  early  as 
1803  a  group  of  five  log  huts  which  sheltered  the  half-breed  fur  trad- 
ers.12 The  fort  itself  was  located  on  the  south  bank  of  the  Chicago 
River  at  what  is  now  Michigan  Avenue.  After  this  first  fort  was  de- 
stroyed on  the  eve  of  the  Fort  Dearborn  Massacre  in  1812  and  a  second 
fort  was  built  in  1815,  there  developed  by  1818  a  village  of  ten  or  twelve 
log  huts,  characterized  by  Major  Long  as  "low,  filthy  and  disgusting," 
and  occupied  by  about  sixty  half-breeds  who  were  mainly  engaged  in 
the  fur  trade.13  In  1830  there  were  still  no  more  than  twelve  huts,  even 
including  three  suburban  cabins  on  Madison  Street.  The  fort  and  trad- 
ing post  were  far  removed  from  the  course  of  western  emigration,  which 
prior  to  1830  had  flowed  through  the  Cumberland  Gap  or  down  the 
Ohio  Valley  and  populated  in  Illinois  only  the  southern  portion  of  the 
state.  Consequently  up  to  this  date  the  growth  of  Chicago  was  negli- 
gible. 

The  canal. — The  plan  for  eliminating  the  Chicago  portage  by  a  canal 
was  discussed  as  early  as  the  project  of  building  a  fort  to  control  it,  and 
in  determining  the  destiny  of  the  future  town,  the  canal  was  by  far  the 
more  important.  The  naive  belief  that  a  channel  eight  or  nine  miles 
long  from  the  end  of  the  south  branch  of  the  Chicago  River  to  the 
Desplaines  River  would  provide  an  adequate  ship  canal  from  the  lakes 
to  the  Gulf  of  Mexico  was  quickly  dispelled  by  even  the  casual  observa- 
tions of  travelers.  It  was  soon  discovered  that  the  Desplaines  River  it- 

10  Quaife,  op,  tit.,  p.  43. 

11  Ibid.,  p.  154,  quoting  "Wisconsin  Historical  Collections,"  XI,  239-40. 

12  Chicago:  A  Book  for  Strangers  and  Tourists  (Chicago:  Galpin,  Hayes,  McClure,  1869), 

p.  20. 

J*  Quaife,  op.  cit.,  p.  28?. 


THE  CANAL  LAND  BOOM  n 

self  was  but  a  shallow  stream  with  several  rapids,  which  at  times  could 
not  be  navigated  in  small  boats.  The  federal  engineers  who  examined 
the  route  reported  that  the  construction  of  a  canal  for  the  entire  dis- 
tance of  one  hundred  miles  from  Chicago  to  LaSalle  would  be  necessary 
to  insure  a  continuous  waterway  for  packet  boats. 

These  difficulties  which  gradually  unfolded  did  not  stop  attempts  to 
secure  state  and  federal  aid  to  construct  a  canal.  In  1673  Joliet  first 
discussed  the  canal  project.  In  1808  Gallatin  included  it  in  his  program 
of  internal  improvements.  In  1814  President  Madison  recommended 
it  to  Congress.14  In  1816  the  United  States  purchased  the  route  from  the 
Indians.15  Illinois,  when  admitted  as  a  state  in  1818,  had  its  northern 
boundary  extended  northward  from  the  southern  tip  of  Lake  Michigan 
for  the  express  purpose  of  taking  in  the  strip  proposed  for  the  canal.16 
In  1817  Major  Stephen  H.  Long  surveyed  and  reported  favorably  on 
it.17  Southern  Illinois  interests  saw  in  it  the  possibility  of  a  new  way 
of  reaching  eastern  markets  that  would  free  them  from  dependence  on 
New  Orleans.  In  1818  Governor  Bond  of  Illinois  accordingly  urged  it 
in  his  first  message  to  the  legislature.18  In  1819  Mr.  Calhoun,  secretary 
of  war,  pointing  out  that  the  canal  would  be  a  vital  transportation  link 
in  time  of  war,  recommended  it  as  necessary  for  national  self-defense.19 
In  1822  Congress  authorized  the  state  of  Illinois  to  survey  and  take  a 
strip  of  land  ninety  feet  wide  for  a  canal.20  In  1823  the  Illinois  legisla- 
ture appointed  a  Board  of  Canal  Commissioners  who  examined  and 
estimated  the  cost  of  five  possible  routes,  the  Chicago-Desplaines 
River  route  being  favored.21  In  January  of  1825,  the  legislature  incor- 
porated the  Illinois  and  Michigan  Canal  Company,  a  private  company 
with  an  authorized  capital  of  $1,000,000,  to  dig  the  canal.22  In  Janu- 
ary of  1826,  before  this  enterprise  could  get  started,  the  legislature,  fear- 
ing that  federal  aid  might  be  jeopardized  by  its  existence,  repealed  its 
charter.23  In  1826  the  state  petitioned  Congress  for  a  land  grant  to 

*«  Knight  and  Zeuch,  op.  cit.,  pp.  4,  16.  v  Ibid.,  II,  70. 

J5  Quaife,  op.  cit.,  p.  342.  l8  Goodspeed  and  Healy,  op.  cit.,  I,  89. 

16  Goodspeed  and  Healy,  op.  cit.,  I,  74.  I9  Ibid.,  II,  72. 

20  Public  Statutes  at  Large  of  the  United  States  (Boston:  Little,  Brown  &  Co.,  1854),  III, 
659-60. 

21  Goodspeed  and  Healy,  op.  cit.,  II,  76. 

32  Laws  of  the  Fourth  General  Assembly  of  Illinois  (ist  sess.;  Vandalia,  1825),  pp.  160-61. 
*3  Goodspeed  and  Healy,  op.  cit.,  II,  76. 


12  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

aid  the  canal,  and,  notwithstanding  the  opposition  of  New  Orleans, 
the  request  was  granted  in  1827.  Alternate  sections  of  land  for  five 
miles  on  each  side  of  the  route  selected  were  given  to  the  state,  but  it 
was  provided  that  unless  the  canal  was  started  in  five  years  and  com- 
pleted within  twenty  years  after  the  passage  of  the  act,  the  money  re- 
ceived from  the  land  sales  should  revert  to  the  United  States.34  In 
January,  1829,  the  Illinois  legislature,  having  received  this  land  grant 
from  Congress,  appointed  three  canal  commissioners  to  select  the 
route,  to  designate  which  alternate  sections  were  to  be  taken  for  the 
canal,  and  to  sell  at  $1.25  an  acre  the  land  thus  chosen.  The  commis- 
sioners picked  the  Chicago-Desplaines  River  route,  and  prepared  a  list 
of  the  sections  of  land  to  be  granted.  This  selection  was  approved  by 
the  President  of  the  United  States  on  May  21,  1830.  Part  of  one  of 
these  sections  of  canal  lands,  three-eighths  of  a  square  mile  that  strad- 
dled the  forks  of  the  Chicago  River,  was  surveyed  and  laid  out  in  town 
lots.  This  was  the  original  town  of  Chicago  shown  in  Figure  4.  It 
covered  the  area  from  Madison  to  Kinzie  streets,  and  from  State  Street 
to  Desplaines  Street.  The  first  lots  in  this  first  Chicago  subdivision  were 
sold  on  September  4,  1830. 

The  canal  itself  was  not  started  until  July  4,  1836,  and,  after  a 
suspension  of  work  in  1842,  was  finally  completed  in  1848.  Although 
the  canal  did  not  serve  as  a  link  in  the  Lake-to-the-Mississippi  trans- 
portation route  until  eighteen  years  after  the  first  sale  of  Chicago  lots, 
its  importance  in  directing  attention  to  Chicago  and  in  stimulating  the 
speculative  land  boom  cannot  be  overemphasized.  The  success  of  the 
Erie  Canal  immediately  after  its  completion  in  1825  and  the  rapid  rise 
in  the  land  values  of  the  towns  along  its  route  led  to  the  extension  of 
the  same  speculative  calculations  to  Chicago  when  population  began  to 
flow  toward  it.  The  first  land-buyers  in  Chicago  saw  in  their  minds' 
eye  not  the  squalid  village  of  log  huts  on  the  banks  of  the  Chicago  River 
but  the  large  city  that  was  expected  to  rise  with  the  completion  of  the 
canal.  That  the  canal  colored  every  resident's  hopes  even  in  the  earliest 
time  is  shown  by  the  following  account  written  in  1835: 

There  is  one  improvement  to  be  made,  however,  in  this  section  of  the  country, 
which  will  greatly  influence  the  permanent  value  of  property  in  Chicago.  I  allude 
to  a  canal  from  the  head  of  Lake  Michigan  to  the  head  of  stream  navigation  on  the 
Illinois  River,  the  route  of  which  has  long  since  been  surveyed.  The  distance  to  be 

*  Public  Statutes  at  Large  of  the  United  States,  II,  234. 


THE  CANAL  LAND  BOOM  13 

overcome  is  something  like  ninety  miles,  and  when  you  remember  that  the  head 
waters  of  the  Illinois  rise  within  eleven  miles  of  the  Chicago  River,  and  that  a  level 
plain  of  not  more  than  eight  feet  elevation  is  the  only  intervening  obstacle,  you  can 
conceive  how  easy  it  would  be  to  drain  Lake  Michigan  into  the  Mississippi  by  this 
route.  Boats  of  18  tons  have  actually  passed  over  the  intervening  prairie  at  high 
water.  Lake  Michigan,  which  is  several  feet  above  Lake  Erie,  is  such  a  never- 
failing  body  of  water  that  it  would  keep  steamboats  afloat  on  the  route  in  the  dri- 
est season.  St.  Louis  would  then  be  brought  comparatively  near  to  New  York, 
while  two-thirds  of  the  Mississippi  Valley  would  be  supplied  by  this  route  immedi- 
ately from  the  markets  of  the  latter.  The  canal  is  the  only  remaining  link  wanting 
to  complete  the  most  stupendous  chain  of  inland  communications  in  the  world.3* 

Under  the  caption  "The  Canal  Made  Chicago"  the  importance  of 
the  canal  is  thus  summarized  by  the  Chicago  Tribune  of  May  13,  1900: 

Chicago  was  then  [before  1830]  only  a  military  post  with  an  Indian  agency 
attached  to  it.  It  didn't  have  enough  taxable  property  to  support  a  bridge  tender, 
much  less  build  a  canal.  When  the  preliminaries  to  the  building  of  the  canal  did 
come  about,  Chicago  immediately  leaped  into  existence  as  a  village.  The  first 
plat  of  Chicago  was  made  by  the  Canal  Commissioners ;  the  first  sale  of  lots  of  Chi- 
cago was  made  by  the  Canal  Commissioners.  Chicago  was  made  by  the  canal  as 
clearly  and  as  positively  as  Western  towns  have  been  made  in  recent  years  and  are 
still  being  made  by  the  advent  of  railroads.  Chicago  was  a  canal  town. 

Land  trails  to  Chicago. — In  addition  to  the  canal  project,  the  land 
trails  to  Chicago  were  an  important  factor  in  its  early  growth.  The 
paths  winding  around  the  lake  or  following  the  high  ground  or  the 
river  courses  that  had  been  made  by  buffalo,  Indians,  and  fur  traders, 
on  their  way  to  the  banks  of  the  Chicago  River,  were  the  first  highways 
whose  intersection  formed  the  nucleus  of  a  town.  Superimposed  by  the 
surveyors  upon  these  diagonal  and  fluctuating  routes  were  the  straight 
section  lines,  intersecting  each  other  a  mile  apart,  which  developed 
into  through  highways  and  carline  streets  as  the  city  grew,  forming  a 
precise  checkerboard  plan.  The  early  trails,  confined  to  definite  lines 
by  the  rows  of  buildings  on  each  side,  still  survive  in  those  main  roads 
that  radiate  out  from  Chicago  like  the  spokes  of  a  wheel.  The  creation 
of  a  hub  for  this  wheel,  at  which  all  these  routes  could  meet  at  a  com- 
mon center,  was,  however,  prevented  by  the  configuration  of  the  Chi- 
cago River. 

The  main  channel  of  the  Chicago  River  and  its  branches  form  a  Y 
which  divides  the  Chicago  region  into  three  main  divisions:  the  north, 

2s  Charles  Fenno  Hoffman,  A  Winter  in  the  Far  West  (London,  1835;  reprinted  by  the 
Fergus  Printing  Co.,  Chicago,  in  1882),  pp.  21-22. 


i4  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

south,  and  west  sides.  The  Chicago  River  was  the  point  of  entry  and 
departure  for  the  great  stream  of  passengers  and  merchandise  carried  on 
the  lake  boats,  and  its  banks  were  the  meeting  place  of  land  and  water 
commerce.  While  the  boats  could  unload  with  almost  equal  facility  on 
any  bank  of  the  river,  the  land  traffic  in  those  days  when  bridges  and 


FIG.  2 

ferries  were  crude  and  few  in  number  generally  terminated  at  the  point 
where  a  particular  land  route  struck  the  river.  The  number  and  the 
volume  of  traffic  of  the  trails  entering  each  division  of  the  city,  there- 
fore, had  an  important  bearing  on  the  early  relative  growth  of  each  of 
these  sections. 

The  movement  of  wagons  into  the  south  division  of  the  city  was  from 
the  first  by  far  the  greatest.  Around  the  bend  of  the  lake  came  the 


THE  CANAL  LAND  BOOM  15 

"Chicago  Road,"  the  main  path  by  which  land  emigration  from  the 
East  poured  into  Chicago.26  From  the  South  ran  the  famous  Vin- 
cennes  trail  over  which  came  the  caravans  of  wagons  from  the  Wabash 
country  to  bring  supplies  to  Chicago.27  Southwest  along  the  route  of 
the  canal  was  an  old  Indian  trail,  known  as  the  "Road  to  the  Widow. 
Brown's,"  and  later  as  "Archer  Avenue."38  The  "Chicago  Road,"  fol- 
lowing the  present  course  of  Cottage  Grove  Avenue,  north  of  Thirty- 
ninth  Street;  the  Vincennes  trail,  which  fluctuated  north  of  Fifty-first 
Street  between  the  present  line  of  State  Street  and  Cottage  Grove 
Avenue;  the  "Road  to  the  Widow  Brown's,"  or  present  Archer  Avenue; 
and  a  trail  from  the  west  that  crossed  the  south  branch  at  Eighteenth 
Street29 — all  converged  at  about  Eighteenth  and  State  streets  and  pro- 
ceeded from  there  to  Fort  Dearborn  on  the  south  bank  of  the  main 
channel  at  Michigan  Avenue. 

The  North  and  West  Side  trails  were  less  important  in  the  beginning, 
for  they  led  into  a  territory  that  contained  very  few  white  inhabitants. 
Terminating  on  the  north  bank  of  the  river  opposite  the  fort  was  the 
Green  Bay  trail  running  northward  along  the  lake  shore  to  Green  Bay 
which  had  been  a  British  outpost  until  1812.  It  was  also  used  by 
travelers  on  their  way  to  Sheboygan,  Racine,  Kenosha,  and  Milwaukee 
when  the  lake  route  was  not  available.  The  "Little  Fort"  trail  followed 
the  present  course  of  Lincoln  Avenue.30 

On  the  West  Side  were  trails  leading  to  Galena  along  the  present 
route  of  Lake  Street  and  Grand  Avenue,31  the  portage  trail  along  what 
is  now  Ogden  Avenue,32  and  trails  running  northwesterly  on  the  ridge 
between  the  north  branch  of  the  Chicago  River  and  the  Desplaines 
River  that  were  later  known  as  Milwaukee  and  Elston  avenues.33  Most 
of  these  trails  converged  on  the  west  bank  of  the  Chicago  River  at  the 
forks. 

The  growth  of  Chicago,  1830-32. — In  1830  the  twelve  log  cabins  that 
constituted  Chicago  had  two  nuclei,  the  fort  and  the  forks  of  the  river, 
connected  by  a  road  following  the  course  of  South  Water  Street.  Three 

26  Milo  M.  Quaife,  Chicago  Highways  Old  and  New  (Chicago:  D.  F.  Keller  &  Co.,  1923), 
pp.  37-46. 

2?  Ibid.,  pp.  54,  58,  60,  69. 

28  Ibid.,  p.  79.  31  ftid.,  pp.  87-88,  91. 

29  Ibid.,  map  opposite  p.  236.  &  Ibid.,  map  opposite  p.  236. 

30  Ibid.,  pp.  105-7.  33  Ibid.,  p.  107. 


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THE  CANAL  LAND  BOOM  17 

taverns,  one  on  each  bank  of  the  river,  faced  one  another  at  the  forks. 
One  on  the  South  Side,  at  the  corner  of  Lake  and  Market  streets,  was 
the  celebrated  Sauganash,  opened  by  Mark  Beaubien  in  1826.  A 
second  on  the  West  Side  at  Lake  and  West  Water  streets  was  the 
"Wolfs  Point"  built  by  Kinzie  in  1828.  A  third  on  the  North  Side  at 
North  Water  and  Orleans  Street  was  established  by  Samuel  Miller  in. 
1828.  A  ferry  connected  the  taverns  in  1831.  With  its  land  trails  failing 
to  find  a  common  center,  the  little  hamlet  faced  the  river,  which  was 
the  main  avenue  of  entry  from  outside. 

Chicago  did  not  grow  from  1830  to  the  early  part  of  1832.  There  were 
still  only  twelve  houses  in  the  latter  year.34  The  location  of  these  build- 
ings is  thus  described: 

Besides  the  fort  there  were  two  frame  houses  on  the  North  Side  and  the  old 
Kinzie  house.  On  the  South  Side  were  two  or  three  small  farm  houses,  and  in  the 
West  Side  the  Kinzie  store  at  the  forks,  and  there  was  Mark  Beaubien's  tavern 
on  Michigan  Avenue.35 

In  these  years  the  tide  of  western  emigration  had  not  yet  penetrated 
the  Chicago  Region,  being  partly  restrained  by  fear  of  the  hostile 
Black  Hawk  Indians  from  turning  northwestward  from  the  old  route 
down  the  Ohio  Valley. 

The  way  to  Chicago  was  rapidly  being  made  easier  and  more  con- 
venient. The  Erie  Canal  had  placed  Chicago  on  a  direct  line  with  New, 
York.  Steamboats  were  plying  the  Great  Lakes  from  Buffalo  to  Chi-, 
cago,  and  the  Mississippi  River  boats  from  New  Orleans  and  St.  Louis 
had  proceeded  up  the  Illinois  River  as  far  as  Peoria  in  i828.36  Even  by 
1831  it  was  found  that  goods  could  be  brought  from  New  York  to  St. 
Louis  by  way  of  Chicago  one-third  cheaper  than  by  New  Orleans.  Salt, 
shipped  from  Syracuse  to  Chicago  by  boat,  sold  for  less  than  the  cost 
of  producing  salt  at  Danville,  Illinois,  and  the  farmers  of  the  Wabash 
learned  that  Chicago  was  the  cheapest  market  in  which  to  buy  eastern 
wares. 

The  Black  Hawk  Indian  menace  was  terminated  by  an  armed  force 

34  Andreas,  op.  cit.,  I,  119. 

35  Ibid,  (letter  of  George  W.  Hoffman,  April  5, 1879).  Mark  Beaubien's  tavern  on  Michi- 
gan Avenue  in  1832  was  the  one  he  operated  after  he  sold  the  Sauganash. 

36  No  regular  line  of  steamboats  was  operating  on  the  Illinois  River  before  1835,  but  the 
name  of  one  steamboat  running  on  the  river  in  1828  is  given,  and  even  before  this  another 
steamboat  of  light  draft,  the  "Ottawa,"  was  making  trips  (Randall  Parrish,  Historic  Illi- 
nois, p.  427). 


i8  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

under  General  Scott  sent  to  Chicago  in  1832.  The  soldiers  not  only  rid 
the  country  of  the  Indian  peril,  but  on  returning  home  they  spread 
the  news  of  the  wonderful  fertility  of  the  Northwest  region,  while  Gen- 
eral Scott  himself  brought  a  favorable  report  to  Washington  about  the 
possibilities  of  Chicago.  The  result  was  that  a  flow  of  settlers  started 
toward  Chicago  in  the  latter  part  of  1832.  By  the  end  of  that  year  there 
were  thirty  buildings  and  two  hundred  people  in  the  village.  There 
were  two  log  bridges,  one  over  the  south  branch  near  Randolph  Street 
and  one  over  the  north  branch  at  Kinzie  Street. 

Chicago  in  1833. — In  1833  there  was  a  row  of  business  houses  and 
cabins  on  South  Water  Street  between  State  and  Wells  Street  and  this 
was  the  principal  street  of  the  town.37  "There  was  nothing  on  Lake 
Street  [in  1833],"  stated  John  Bates,  a  settler  of  1832,  "except  perhaps 
the  Catholic  Church  begun  on  the  northwest  corner  of  Lake  and 
State."38  As  Rev.  Jeremiah  Porter  said,  "The  corner  of  Clark  and  Lake 
in  1833  was  a  lonely  spot  almost  inaccessible  on  account  of  surrounding 
sloughs  and  bogs."39  Charles  Butler  in  August,  1833,  noticed  only  a 
tavern  on  the  West  Side  and  a  single  building  known  as  the  "Block 
House"  on  the  North  Side.40 

In  1833  the  houses  began  to  be  constructed  of  green  lumber  obtained 
from  a  local  sawmill  on  the  north  branch  instead  of  the  logs  that  had 
been  previously  used.41  Nevertheless,  according  to  Butler,  "the  houses, 
with  one  or  two  exceptions,  were  of  the  cheapest  and  most  primitive 
character  for  human  habitation,  suggestive  of  the  haste  with  which 
they  had  been  put  up."42  Charles  Latrobe  thus  describes  the  building 
activity  of  that  year: 

The  interior  of  the  village  was  one  chaos  of  mud,  rubbish  and  confusion.  Frame 
and  clapboard  houses  were  springing  up  daily  under  the  active  axes  and  hammers  of 
the  speculators  and  piles  of  lumber  announced  the  preparation  of  other  edifices  of 
equally  light  character.-" 

svGranville  T.  Sproat,  letter  to  the  Chicago  Tribune,  December  12,  1886;  letter  of 
Charles  Butler,  December,  1881,  in  Andreas,  op.  cit.,  I,  129. 
38  Andreas,  op.  cit.,  I,  131.  39  Ibid.,  p.  300. 

*>Ibid.,  p.  129  (letter  of  Charles  Butler,  December  17,  1881). 

41  Charles  Cleaver,  Reminiscences  of  Chicago  during  the  Forties  and  Fifties  (Chicago : 
Fergus  Printing  Co.,  1913),  p.  54. 

42  Andreas,  op.  cit.,  I,  129  (letter  of  Charles  Butler,  December  17,  1881). 
« Ibid.,  p.  124. 


THE  CANAL  LAND  BOOM  19 

From  150  to  200  new  buildings  were  erected  in  Chicago  in  1833.  The 
number  of  vessels  arriving  had  increased  from  7  in  1831  and  45  in  1832 
to  120  in  1833.  A  newspaper,  the  Chicago  American,  made  its  first  ap- 
pearance. A  town  government  was  organized  by  the  350  inhabitants. 
The  federal  government  appropriated  $25,000  for  dredging  the  harbor. 
The  first  manufactures — a  tannery  (1831),  Dole's  meat-packing  plant 
(1832),  a  soap  factory  (1833),  and  a  brick  yard  (1833) — had  started 
along  the  banks  of  the  river,  chiefly  on  the  North  Side. 

Chicago  in  1834. — The  growth  of  Chicago  was  particularly  rapid 
during  1834,  as  its  population  increased  from  the  350  of  the  year  before 
to  2,000.  The  principal  growth  of  that  year  was  along  Lake  Street, 
but  the  corner  of  Lake  and  LaSalle  streets  was  still  so  far  from  the  cen- 
ter of  business  that  the  construction  of  a  four-story  brick  building  at 
that  point  was  referred  to  as  "Hubbard's  Folly."  The  construction  of  a 
drawbridge  over  the  main  channel  at  Dearborn  Street  in  1834  had  the 
effect  of  concentrating  business  near  South  Water  and  Dearborn 
Street.  A  freshet  in  the  spring  of  1834  completed  the  work  of  dredging 
the  harbor.  Steamboats  and  larger  vessels  which  had  hitherto  been 
compelled  to  anchor  in  the  lake  opposite  the  bar  at  the  river's  mouth 
could  now  enter  through  the  main  channel  into  the  heart  of  the  business 
district.  The  limited  extent  of  the  town  in  1834  is  indicated  by  the  fol- 
lowing account: 

Besides  the  log  cabin  on  the  West  side  kept  by  Mr.  Stiles,  there  was  a  black- 
smith shop.  That  was  all.  On  the  North  side  were  John  Kinzie's  house  and  a  few 
others.  On  the  South  side  there  was  one  house  south  of  Lake  Street.  On  Lake  and 
South  Water  streets  was  the  main  village.  Lake  Street  boasted  one  brick  block 
which  belonged  to  Hubbard.44 

Chicago  in  1835-36. — Chicago  continued  to  grow  rapidly  during  1835 
and  1836.  The  population  increased  from  the  2,000  of  1834  to  3,264  in 
1835  and  3,820  in  1836.  By  1837  there  were  450  buildings  as  contrasted 
with  1 80  in  1833  and  12  at  the  beginning  of  1832. 

The  main  part  of  the  settled  area  of  Chicago  in  1836  was  on  the 
South  Side  near  the  river.  As  one  observer  said: 

When  the  bank  was  in  operation  [December,  1835-36],  Chicago  was  confined 
principally  to  the  vicinity  of  the  river.  The  dwellings  even  did  not  stretch  far 
away  from  the  center.  In  the  spring  of  1835  a  three-story  brick  building,  probably 
117  Lake  Street,  near  LaSalle  Street,  was  erected  and  finished  in  the  fall.  It  was 

44  Letter  of  Enoch  Chase,  August  2,  1883,  in  ibid.,  pp.  138-39. 


20  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

the  general  impression  that  the  stand  was  too  far  from  the  center  of  business  and 
would  prove  a  bad  speculation.  « 

The  solidly  built-up  section  did  not  extend  south  of  Randolph 
Street  on  the  South  Side  in  1836,  according  to  Mr.  Charles  C.  P. 
Holden.  "It  was  principally  prairie  with  some  timber  southerly  from 
Randolph  Street,  though  there  were  some  groups  of  buildings  scattered 
here  and  there  with  small  patches  of  ground  inclosed  with  rail  fences."46 
Dearborn  Street,  near  the  drawbridge,  between  Lake  and  South  Water 
streets,  was  "the  lively  street"  and  the  center  of  activity,  for  there  was 
located  Garrett's  auction-room  where  $1,800,000  worth  of  real  estate 
was  sold  in  the  latter  part  of  1835  and  i836.47 

The  North  Side  began  to  grow  rapidly  in  1835.  When  Charles  But- 
ler inspected  Kinzie's  and  Wolcott's  additions  in  May  of  1835,  he  gave 
the  following  description  of  the  land  that  lay  just  north  of  the  main  chan- 
nel of  the  river.  "The  property  lay  there  on  the  north  side  of  the  river 
covered  with  a  coarse  growth  of  oak  and  underbrush,  wet  and  marshy 
and  muddy  from  the  recent  rains."48  By  1836,  however,  there  was  a  sub- 
stantial settlement  on  the  North  Side  along  the  river  and  east  of  Clark 
Street,  for  Mr.  Holden  said  that  "the  North  Side  at  that  time  [1836] 
was  very  pretentious  and  there  was  lots  of  business  done  over  there, 
though  but  a  short  distance  from  where  we  landed  was  the  wild  woods 
of  that  day."49  The  principal  shipping  and  forwarding  business  at  this 
time  was  done  on  the  north  side  of  the  river. 

The  growth  of  the  West  Side  lagged  far  behind  the  other  sections  in 
this  period.  When  Charles  Cleaver  hi  1838  put  up  a  building  at  the 
corner  of  Washington  and  Jefferson  streets,  which  is  only  three  blocks 
west  of  the  river,  he  stated  that  "standing  there  alone  for  years,  it 
served  as  a  beacon  for  many  a  belated  traveller  over  the  ten  miles  of 
prairie  between  the  village  and  the  Desplaines  River."  "At  that  time," 
he  continued,  "it  seemed  a  long  way  out  of  town.  There  was  but  one 
shanty  between  it  and  the  Lake  Street  bridge,  and  it  really  seemed 
quite  a  walk  over  the  prairie  to  reach  it."  Thereafter,  from  1838  to 
1843  a  house  was  gradually  built  here  and  there  between  Cleaver's 
house  and  the  river,  but  the  filling-in  process  was  very  slow.50 


«  Chicago  Tribune,  July  3,  1887. 

47  Letter  of  J.  D.  Bonnell,  March  15,  1876,  cited  in  Andreas,  op.  cit.,  I,  137. 

48  Ibid.,  p.  131.  4'  Chicago  Tribune,  July  3,  1887. 
50  Cleaver,  op.  cit.,  pp.  55-56. 


THE  CANAL  LAND  BOOM  21 

By  the  close  of  1836  Chicago  contained  some  very  pretentious  struc- 
tures for  that  time.  The  Saloon  (Salon)  Building,  a  four-story  brick 
structure  at  the  corner  of  Clark  and  Lake  streets,  contained  the  finest 
hall  west  of  Buffalo.  The  four-story  Lake  House,  built  on  the  corner 
of  Rush  and  Michigan  Street  on  the  North  Side  at  a  cost  of  $100,000 
was  one  of  the  best  hotels  in  the  West.  The  Ogden  House  at  Rush, 
Ontario,  Cass,  and  Erie  streets,  and  the  Clarke  House  at  Sixteenth  and 
Prairie,  standing  a  mile  and  a  half  away  from  any  other  house,  were  the 
two  mansions  of  that  day,  whose  magnificence  surpassed  all  others. 
Each  of  these  homes  cost  $10,000 — a  large  expenditure  for  that  time. 

A  newspaper  correspondent  revisiting  Chicago  in  January  of  1837 
after  an  absence  of  two  years  found  that  great  changes  had  taken  place. 

I  can  scarcely  recognize  it  as  the  same  spot.  Where  then  I  walked  over  the  un- 
broken prairie,  the  spacious  avenue  is  now  opened,  crowded  with  carts  and  wagons, 
and  occasionally  a  showy  family  rolling  and  dashing  in  the  hurry  of  trade,  or  the 
pomp  of  the  native  "sucker"  stumbling  as  I  do,  over  bales  and  boxes  on  the  side- 
walks, or  gaping  at  the  big  signs  and  four-story  brick  houses.*1 

This  scene  of  activity  had  a  very  limited  scope,  however,  for  of  the 
4,179  people  in  Chicago  in  1837,  there  were  only  433  on  the  entire  West 
Side  and  only  320  on  the  North  Side  west  of  Clark  Street.  The  limits 
of  the  settled  area  in  1837  were  thus  defined: 

The  inhabited  portion  of  Chicago  [in  1837]  consisted  chiefly  of  Kinzie  Street  on 
the  North  Side  with  a  few  scattered  residences  on  Clark,  Dearborn,  Wolcott  and 
Rush;  on  Lake  and  South  Water  streets  on  the  South  Side;  and  on  those  portions  of 
Clark,  Dearborn  and  LaSalle  streets  between  South  Water  and  Washington  streets 
there  were  small  frame  houses  surrounded  by  gardens.  State  and  Madison  Street 
was  then  way  out  in  the  country.  The  West  Side  was  most  sparsely  settled  and 
plover  and  snipe  abounded  from  Clinton  Street  to  Union  Park.52 

The  concentration  of  a  population  of  4,179  into  a  settled  area  of  only 
25  blocks,  or  100  acres,  when  there  were  boundless  tracts  of  prairie  in 
every  direction  seems  strange.  The  explanation  is  to  be  found  in  the 
abnormal  age  and  sex  distribution  of  the  population  and  in  the  in- 
tolerably bad  condition  of  the  roads.  Over  1,900,  or  45  per  cent  of  the 
total  population,  consisted  of  adult  males,  and  there  was  a  large  pro- 
portion of  single  men  who  lived  at  hotels  or  boarding-houses  or  at  the 
stores  of  their  employers.53  Transient  sailors  lived  on  ships;  farmers  and 

51  Andreas,  op.  cit.,  I,  138. 

53  Moses  and  Kirkland,  History  of  Chicago,  I,  105. 

53  Wentworth,  Reminiscences  of  Early  Chicago  (Chicago:  Lake  Side  Press,  1912). 


22  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

emigrants  camped  in  their  prairie  schooners.  Thus,  there  was  an  aver- 
age of  over  10  persons  to  each  of  the  398  dwellings  in  the  city.  The 
overcrowded  condition  in  Chicago,  even  in  1834,  is  thus  told:54 

By  the  middleof  May  [1834]  there  was  no  room  for  the  constant  crowd  of  incomers, 
except  as  buildings  were  hastily  put  up  for  their  accommodation,  or  as  sojourners 
leaving  town  made  room  for  them.  The  hotels  and  boarding  houses  were  always 
full,  and  full  meant  three  in  a  bed  sometimes,  with  the  floor  covered  besides.  Many 
of  the  emigrants  coming  in  their  own  wagons  had  only  them  or  a  rude  camp,  hastily 
built  for  home  and  shelter.  All  about  the  outskirts  of  the  settlement  was  a  cordon 
of  prairie  schooners,  with  tethered  horses  between,  interspersed  with  camp  fires, 
at  which  the  busy  housewives  were  ever  preparing  meals  for  the  voracious  pioneers. 

The  following  description  of  the  early  streets  of  Chicago  also  explains 
why  people  did  not  venture  far  out  into  the  prairie  but  huddled  close 
to  the  river  and  the  stores:  "From  the  rains  the  streets  of  the  village 
soon  became  deluged  with  mud.  It  lay  in  many  places  half-leg  deep, 
up  to  the  hubs  of  carts  and  wagons  in  the  middle  of  the  street.  The 
smaller  children  I  used  to  bring  to  school  and  take  home  on  my  back."55 

Chicago  in  1837  was  also  abnormally  developed  with  respect  to  the 
number  of  its  stores.  The  29  dry-goods  stores,  5  hardware  stores,  45 
grocery  and  provision  stores,  10  taverns,  and  19  lawyers'  offices  were 
far  in  excess  of  the  requirements  of  a  population  of  4,000.  Chicago  was 
the  trading  center  of  the  territory  within  a  radius  of  200  miles,  how- 
ever, and  as  many  as  500  farmers'  wagons  could  be  counted  at  one  time 
in  their  camp  in  the  town.  Chicago  was  also  a  refitting-point  for  emi- 
grants, the  county  seat,  and  hence  the  legal  center  of  an  area  that  em- 
braced the  present  Cook,  Lake,  McHenry,  Will,  and  DuPage  counties, 
an  area  of  approximately  3,200  square  miles.  It  was  the  seat  of  the 
government  land  office  for  the  surrounding  region,  the  site  of  the 
branch  bank  of  the  state,  and  a  distributing-point  for  the  Indian  trade. 
The  total  volume  of  business  amounted  to  $1,000,000  in  1836,  with  one 
firm  on  Lake  Street  reporting  sales  of  $41,000  even  in  the  depression  in 
1837.  At  this  time  the  surrounding  country  was  not  even  self-sufficing, 
and  all  the  goods  sold  were  imported  from  the  East,  the  ships  going 
back  with  sand  as  ballast. 

The  North  Side  was  growing  faster  than  the  other  sections  of  the 
city  from  1837  to  1840,  its  population  increasing  from  1,238  to  1,759, 
a  gain  of  41  per  cent,  while  the  population  of  the  South  Side  increased 

54  Andreas,  op.  cit.t  I,  134. 

55  Chicago  Tribune,  December  12,  1886  (Granville  T.  Sproat,  the  first  school-teacher). 


THE  CANAL  LAND  BOOM  23 

only  from  2,330  to  2,664,  a  gain  of  14  per  cent,  and  the  population  of  the 
West  Side  remained  stationary.  All  the  warehouses  for  receiving  farm- 
ers' produce  were  located  on  the  north  bank  of  the  river,  and  as  the 
farmers  came  from  the  south,  it  was  necessary  for  them  to  cross  the 
Dearborn  Street  bridge.  In  1839  this  bridge  became  unsafe  and  was 
demolished,  a  ferry  being  substituted  for  it.  About  this  time  property 
owners  on  South  Water  Street  began  to  build  warehouses  there  with 
the  result  that  the  farmers  unloaded  their  produce  on  the  South  Side 
and  no  longer  crossed  the  river.56  The  North  Side  interests  attempted 
to  regain  their  old  trade  by  securing  the  building  of  a  bridge  over  the 
main  channel  at  Clark  Street  in  1840.  This  move  did  not  bring  the 
trade  back  to  the  North  Side,  but  it  did  aid  in  the  establishment  of  a 
new  business  center  at  Clark  and  Lake  streets.  As  William  B.  Ogden 
wrote  in  1841,  "Business  is  all  concentrating  on  Lake  and  Clark  streets, 
and  every  concentration  of  it  makes  serious  inroads  on  the  little  that 
is  left  on  our  [i.e.,  North  Side]  side."57  The  North  Side  never  recovered 
its  business  prestige,  but  it  held  the  position,  during  the  forties,  of  the 
leading  fashionable  residential  section  of  Chicago. 

Chicago  grew  slowly  during  the  years  of  depression,  1837-42.  By 
1842  it  extended  three  or  four  blocks  in  every  direction  from  the  river. 
Mr.  Waughop  thus  characterizes  the  young  city  in  that  year:  "In  1842 
Chicago  had  the  appearance  of  an  overgrown  country  town.  The  limits 
[i.e.,  of  the  settled  area]  on  the  north  Indiana  [Grand],  Madison  on  the 
South  and  Jefferson  on  the  West."58 

Such  was  the  physical  growth  of  Chicago  during  its  first  land  cycle, 
which  will  now  be  described. 

C.    LAND  VALUES  IN  CHICAGO,  1830-42 

The  start. — Although  the  possibility  of  a  canal  from  the  Chicago  to 
the  Desplaines  River  had  been  discussed  for  many  years  prior  to  1830, 
and  the  strategic  importance  of  the  site  of  Chicago  had  long  been  evi- 
dent, there  was  no  attempt  to  buy  government  land  in  the  Chicago 
region  before  1830.  The  long  nation-wide  depression  that  began  in 
1819,  together  with  the  local  financial  difficulties  that  had  followed  the 

s6  Henry  Brown,  The  Present  and  Future  Prospects  of  Chicago  (Chicago:  Fergus  Print- 
ing Co.,  1876),  p.  22. 

57  Letter  of  William  B.  Ogden,  March  27,  1841  (MS  in  Chicago  Historical  Society). 

58  J.  W.  Waughop  in  Chicago  Tribune,  September  28,  1884. 


24  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

collapse  of  the  first  attempt  at  state  banking,  as  well  as  the  lack  of 
population  in  this  region,  seem  to  have  prevented  any  speculative 
movement  from  getting  started.  In  1833  the  Pottawatomie  Indians 
sold  to  the  United  States  20,000,000  acres  near  Chicago  at  the  rate  of 
approximately  $0.06  an  acre.59  Up  to  1830  no  part  of  the  Chicago  region 
was  considered  more  valuable  than  any  other  government  land  that  was 
offered  for  sale  throughout  the  West  for  a  minimum  of  $1.25  an  acre. 
The  value  of  the  211  square  miles  in  the  present  city  limits  of  Chicago 
was,  therefore,  no  more  than  $800  a  square  mile,  or  $168,800,  at  the 
beginning  of  1830.  There  were  few  buyers  for  it  at  this  price  and  hence 
even  this  valuation  for  1830  might  be  considered  excessive.  Kinzie  did 
not  consider  it  worth  while  to  exercise  his  pre-emption  rights  on  the  58 
acres  lying  at  the  forks  of  the  river.60  The  first  sale  of  lots  by  the  Canal 
Commissioners  in  September,  1830,  showed  only  a  slight  advance  over 
the  minimum  acre  value.  The  highest  price  paid  for  an  8o-by-i8o-foot 
lot  on  the  river  was  only  $100. 

The  corners  of  South  Water  Street  and  Lake  and  Dearborn  streets 
sold  for  $0.50  a  front  foot.  Back  lots  sold  for  as  low  as  $10  for  half- 
acre  tracts.  The  average  value  of  the  Original  Town  could  scarcely 
have  exceeded  $25  an  acre  at  the  time,  while  land  directly  adjoining 
the  original  townsite  on  the  north  side  of  the  river  still  sold  for  $1.25 
an  acre.61 

The  advance  in  land  values  from  1830  to  1832  was  very  slight,  for  the 
corner  of  Lake  and  Wells  (80  feet  by  150  feet)  sold  for  only  $39  in  1832 
and  the  corner  of  the  same  size  at  South  Water  and  Dearborn  for  only 
$78. 62  A  corner  of  Randolph  and  Dearborn  streets  sold  for  only  $60 
the  same  year.63  A  visitor  to  Chicago  who  saw  a  sheet  of  water  cover- 
ing most  of  the  site  of  the  future  metropolis  said,  "I  would  not  give 
six  pence  an  acre  for  the  whole  of  it."64 

The  rise  begins. — The  marked  increase  in  population  and  building 
activities  during  1833  was  reflected  in  the  beginning  of  a  sharp  increase 
in  the  value  of  lots  in  the  Original  Town  in  the  improved  business  sec- 
tion on  the  south  side  of  the  river.  A  lot  on  South  Water  Street,  just 

59  Andreas,  op.  cit.,  I,  125-28. 

60  Quaife,  Chicago  Highways  Old  and  New,  p.  19. 

61  Shortall  and  Hoard's  Abstracts,  Vol.  80,  p.  526. 

62  Ibid.,  Vol.  85,  p.  510.  <&  Ibid.,  Vol.  75,  p.  156. 

64  James  Parton,  article  on  "Chicago"  in  Atlantic  Monthly,  March,  1867,  p.  326. 


FIG.  4 


26  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

west  of  Wells,  that  sold  for  $42  in  September,  1830,  and  for  only  $66  as 
late  as  October,  1833,  brought  $800  on  November  30,  1833.  The  de- 
mand for  lots  for  actual  use  started  a  speculative  movement  in  which 
prices  advanced  from  day  to  day.  Real  estate  activity  spread  from 
the  center  to  the  periphery  of  the  town,  and  land  operations,  at  first 
confined  to  a  few,  engaged  the  attention  of  every  resident.  The  genesis 
of  this  real  estate  boom  is  thus  described  by  Andreas: 

At  first  the  purchases  were  what  might  be  termed  legitimate,  a  lot  for  cash  on 
which  the  purchaser  would  erect  a  dwelling  or  a  store.  The  legitimate  demand  soon 
absorbed  the  floating  supply  and  prices  began  to  rise  under  the  competition  of 
anxious  buyers.  Lots  purchased  one  day  for  $50.00  were  sold  the  next  for  $60.00 
and  resold  the  next  month  for  $100.00.  It  did  not  take  long  under  such  circum- 
stances to  develop  a  strong  speculative  fever,  which  infected  every  resident  of  the 
town  and  was  caught  by  every  newcomer.  At  the  close  of  the  year  1834  the  disease 
had  become  fairly  seated.  Whatever  might  be  the  business  of  a  Chicagoan  or  how- 
ever profitable,  it  was  not  considered  a  full  success  except  it  showed  an  outside 
profit  on  lots  bought  and  sold.6* 

As  the  demand  for  lots  at  the  center  of  the  town  grew  more  intense, 
a  new  supply  of  lots  beyond  the  limits  of  the  settled  area  was  put  on 
the  market  and  the  scope  of  activity  was  broadened.  The  School  Board 
was  prompted  to  subdivide  the  School  Section — the  square  mile  from 
State  to  Halsted  streets  and  from  Madison  to  Roosevelt  Road.  The 
142  blocks  of  an  average  size  of  3.5-4  acres  were  sold  on  October  4, 

1833,  at  the  average  rate  of  $60  an  acre,  or  $38,865  for  the  entire  sec- 
tion except  the  two  corners  on  Madison  Street  at  State  and  Halsted 
streets  that  were  reserved  for  school  sites.66  The  advance  in  value  from 
$1.25  to  $60  an  acre  from  1830  to  1833  was  considered  quite  satisfactory 
by  the  School  Board  at  the  time  of  the  sale,  but  they  soon  regretted 
their  haste  in  selling  this  land.  Ever  afterward  they  were  to  be  blamed 
for  disposing,  for  this  trifling  sum,  of  what  later  became  the  most  valu- 
able square  mile  ever  given  for  the  benefit  of  the  education  of  future 
generations. 

Gaming  momentum. — The  rise  in  land  values  gained  momentum  in 

1834.  The  entire  United  States  was  beginning  to  engage  in  feverish 
land  speculation,  and  people  were  coming  to  Chicago  with  visions  of 
the  future  city  at  the  mouth  of  the  Illinois  and  Michigan  canal.  In 
June,  1834,  the  corner  of  South  Water  and  Clark  Street,  80  by  180  feet, 

^Op.  dt.,  I,  115. 
66  Ibid.,  p.  133. 


THE  CANAL  LAND  BOOM  27 

sold  for  $3,500,  thirty-five  times  as  much  as  had  been  paid  for  it  two 
years  before.  A  year  later  it  sold  for  $i5,ooo.67 

A  number  of  factors  contributed  to  swell  the  rising  tide  of  Chicago 
land  values  in  1835.  First,  the  Illinois  legislature  on  February  14,  1835, 
authorized  the  governor  to  pledge  the  canal  lands  and  tolls  for  a  loan 
of  $500,000  to  start  work  on  digging  the  canal.68  Second,  the  same  body 
chartered  a  new  State  Bank  of  Illinois  with  a  capital  of  $1,500,000, 
empowering  it  to  borrow  $1,000,000  and  reloan  it  upon  Illinois  real 
estate  at  not  more  than  half  its  value.  It  was  also  permitted  to  issue 
notes  up  to  two  and  a  half  times  its  capital  to  be  redeemed  in  specie 
under  penalty  of  enforced  liquidation.69  A  branch  of  this  bank  was 
established  in  Chicago  in  December,  1835,  and  one  of  the  most  potent 
devices  for  raising  land  values,  liberal  credit  to  land-buyers,  was  there- 
by created.  Third,  a  government  land  office  was  opened  in  Chicago  on 
May  5,  1835.  This  attracted  to  the  city  a  horde  of  speculators  and  real 
estate  agents  and  created  a  market  in  which  buyers  and  sellers  were 
brought  into  close  compass. 

Repercussions  of  speculative  forces  that  were  sweeping  the  entire 
nation  interacted  upon  these  local  factors  and  produced  a  higher  pitch 
of  excitement  than  these  state  policies  alone  could  have  generated.  The 
bills  of  the  state  banks  of  Michigan,  Indiana,  and  Wisconsin  were  even 
more  numerous  in  Chicago  than  the  bills  of  the  State  Bank  of  Illinois. 
New  batches  of  Michigan  bills  could  be  secured  almost  at  will  by  a  law 
which  authorized  such  notes  to  be  issued  in  exchange  for  private  obliga- 
tions secured  by  mortgages  on  the  lands  in  that  state.  The  fame  of 
Chicago  real  estate  was  so  great  in  New  York  City  that  Chicago  lots 
were  sold  there  at  public  auction.  The  high  prices  paid  for  these  lots 
in  the  eastern  city  astonished  the  local  speculators  and  stimulated  fresh 
advances  when  the  news  finally  reached  the  West.  The  report  of  a  sale 
by  Mr.  Hubbard  of  a  half-interest  in  a  tract  of  eighty  acres  at  the 
corner  of  Halsted  and  Chicago  Avenue  for  $80,000  in  New  York  in 
1835,  which  represented  a  profit  of  $77,500  made  in  a  few  months,  was 
at  first  not  believed  to  be  true.  When  confirmed  by  Mr.  Hubbard  him- 
self, local  landowners  revised  upward  their  opinion  as  to  the  value  of 

67  Goodspeed  and  Healy,  op.  cit.,  I,  107;  Shortall  and  Hoard's  Abstracts,  Vol.  40,  p.  892. 

68  Laws  of  Illinois  (pth  General  Assembly,  ist  sess.;  Vandalia,  1835),  p.  222. 

69  Laws  of  Illinois  (1834-35),  p.  7;  G.  W.  Dowrie,  Development  of  Banking  in  Illinois, 

1863  (University  of  Illinois,  1913),  pp.  61-63. 


28  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

their  holdings.  Buyers  brought  money  from  New  York,  from  the  South, 
and  even,  in  the  case  of  George  Smith,  from  Scotland  to  invest  in 
Chicago  lands.  If  outsiders  were  thus  so  anxious  to  buy,  it  is  a  matter 
of  little  surprise  that  the  local  residents,  who  saw  the  rapid  rise  in  land 
values  which  was  daily  taking  place  before  their  eyes,  invested  all  the 
money  they  could  raise  in  land,  which  was  making  people  wealthier  in 
a  year  than  a  lifetime  of  hard  labor.  The  effect  upon  local  sentiment 
of  this  outside  participation  in  the  Chicago  land  market  is  thus  de- 
scribed by  Andreas: 

The  speculative  mania  was  not  confined  to  Chicago  or  the  West.  A  superabun- 
dance of  paper  money  issued  under  divers  state  laws  had  flooded  the  whole  country, 
in  volume  far  in  excess  of  the  requirements  of  legitimate  trade,  and  was  seeking 
outside  investment  in  all  quarters.  In  the  money  centers  of  the  East,  New  York, 
Boston  and  Philadelphia,  a  furore  of  speculation  in  all  commodities  and  in  real 
estate  was  at  its  height  before  the  Western  mania  was  fairly  started.  The  rumors 
of  fortunes  made  in  a  day  in  Chicago  in  the  purchase  of  Western  lands  soon  reached 
New  York,  where  among  the  capitalists  the  excitement  became  but  little  less  than 
at  home.  There  a  new  speculative  demand  grew  up  which  proved  an  outlet  for  the 
avalanche  of  new  towns  that  were  being  thrown  on  the  market.  But  for  this  the 
craze  might  have  spent  itself  sooner;  as  it  was,  Eastern  capitalists,  after  once  em- 
barked on  the  trade,  became  the  most  reckless  and  wildest  speculators  and  held  the 
excitement  at  fever  heat  until  the  collapse  which  began  in  the  East  forced  them 
to  take  an  observation,  which  resulted  in  a  sudden  and  complete  stoppage  of  mone- 
tary supplies  from  that  source.70 

The  supply  of  subdivided  lots  in  Chicago  was  constantly  being  in- 
creased to  meet  the  growing  demand.  Kinzie's  Addition,  north  of  the 
river,  east  of  State  Street,  had  been  platted  in  1833,  Wolcott's  and 
Bushnell's  additions,  on  the  North  Side  from  State  to  Sedgewick 
streets  and  from  Kinzie  to  Division  Street,  were  added  in  1835.  Most  of 
the  blocks  in  the  School  Section  had  also  been  split  up  into  lots  by 


At  full  speed.  —  Under  the  influence  of  these  forces,  the  rise  of  land 
values  in  Chicago  in  1835  was  extremely  rapid.  The  Tremont  House 
lot  at  the  corner  of  Lake  and  Dearborn  (80  by  180  feet)  that  could  have 
been  bought  for  a  cord  of  wood,  a  pair  of  boots,  and  a  barrel  of  whiskey 
in  1831,  1832,  and  1833,  respectively,  was  now  valued  at  a  sum  of 
money  that  would  fill  a  warehouse  with  such  commodities.72  Dole's  cor- 

70  Op.  Cit.,  I,   I35. 

71  Plats  of  the  Chicago  Title  and  Trust  Co. 

72  J.  D.  Bonnell  in  Andreas,  op.  cit.,  I,  137. 


THE  CANAL  LAND  BOOM  29 

ner,  at  Dearborn  and  South  Water  streets  (80  by  180  feet),  was  sold  for 
$9,000  in  March  of  1835  and  for  $25,000  in  December.  One  hundred 
thousand  dollars  was  offered  and  refused  for  Hogan's  block  at  272 
Lake  Street.73 

Lots  and  blocks  in  the  School  Section  rose  precipitately  in  value. 
Block  134  increased  from  $400  to  $2,200  between  March  20  and  June  6, 
i835.74  Block  137  advanced  from  $260  in  1933  to  $3,500  on  December 
7,  i835.7S  Block  65  rose  from  $602  in  1834  to  $2,000  in  1835.^  Other 
blocks  advanced  in  like  proportion.  The  corner  of  Clark  and  South 
Water  streets,  80  by  150  feet,  that  sold  for  $2,000  on  March  15,  1834, 
and  $3,500  on  June  i,  1834,  brought  $15,000  on  June  10,  i835.77  The 
effect  of  the  rise  was  felt  as  far  as  six  miles  from  the  center  of  the  town. 
Land  at  Madison  and  Kedzie  had  risen  to  $10  an  acre,78  at  Fuller  ton 
and  Cicero  to  $12  an  acre,79  and  at  Sixty-third  and  State  to  $10  an 
acre80 — all  having  made  this  gain  from  the  base  price  of  $1.25  an  acre 
by  the  fall  of  1835.  Land  in  the  southern  and  northwestern  part  of  the 
present  city,  however,  could  still  be  bought  for  $1.25  an  acre  in  1835. 

The  peak. — This  rise  in  land  values  continued  during  the  spring  and 
summer  of  1836.  The  agents  of  the  governor  had  been  unable  to  obtain 
a  loan  of  $500,000  at  5  per  cent  interest,  secured  only  by  a  pledge  of  the* 
canal  lands  and  tolls  as  authorized  by  the  law  of  1835,  so  in  January, 
1836,  a  new  law  was  passed  authorizing  the  governor  to  pledge  the 
general  credit  of  the  state  for  a  loan  of  $500,000  at  6  per  cent  interest. 
It  also  provided  for  the  sale  of  lots  in  the  Original  Town  of  Chicago  and 
in  Fractional  Section  15  on  June  20,  1836,  at  prices  not  less  than  valua- 
tions placed  on  them  beforehand  by  the  Canal  Commissioners.81  The 
same  law  also  allowed  that  method  of  partial  payment,  known  as 
"canal  terms,"  by  which  the  purchasers  of  land  were  required  to  pay 
only  one-fourth  down  and  the  balance  in  three  equal  instalments  in  one, 
two,  and  three  years,  with  interest  at  6  per  cent  per  annum  on  the  un- 

«  Goodspeed  and  Healy,  op.  cit.,  I,  116. 

74  Shortall  and  Hoard's  Abstracts,  Vol.  34,  pp.  820-21. 

75  Ibid.,  pp.  320-32. 

76  Ibid.,  Vol.  39,  pp.  114-15.  77  Ibid.,  Vol.  40,  pp.  892-94. 
78  Chicago  Title  and  Trust  Abstracts,  Vol.  940,  p.  569. 

v>Ibid.,  Vol.  3302,  p.  512.  8o  Ibid.,  Vol.  1078,  p.  215. 

81  Laws  of  Illinois  (gih  General  Assembly,  2d  sess.;  Vandalia,  1836),  pp.  145-50,  sees, 
i,  2,  33. 


30  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

paid  balance.83  Under  the  conditions  of  this  law  of  1836,  a  loan  of 
$500,000  was  successfully  negotiated  in  New  York.83  The  date  fixed 
by  legislative  fiat  for  the  sale  of  town  lots  in  Chicago  almost  coincided 
with  the  peak  of  the  real  estate  market.  Consequently,  with  sales  on 
that  day  of  $1,619,848,  of  which  $400,000  was  received  in  cash,84  the 
Canal  Commissioners  had  sufficient  funds  to  start  the  canal  at  Chicago 
on  July  4,  1836.  At  last  the  preliminary  work  had  begun  on  the  project 
upon  which  such  great  speculative  hopes  had  been  founded. 

Speculation  in  Chicago  reached  fever  heat  by  June  and  July  of  1835. 
That  is  was  absorbing  the  attention  of  nearly  everyone  in  the  town  is 
indicated  by  the  following  account  by  Harriet  Martineau: 

I  never  saw  a  busier  place  than  Chicago  was  at  the  time  of  our  arrival  [1836]. 
The  streets  were  crowded  with  land  speculators,  hurrying  from  one  sale  to  another. 
A  negro  dressed  up  in  scarlet  bearing  a  scarlet  flag  and  riding  a  white  horse  with 
housings  of  scarlet  announced  the  time  of  sale.  At  every  street  corner  where  he 
stopped  the  crowd  gathered  around  him;  and  it  seemed  as  if  some  prevalent  mania 
infected  the  whole  people.  As  the  gentlemen  of  our  party  walked  the  streets,  store- 
keepers hailed  them  from  their  doors  with  offers  of  farms  and  all  manner  of  land 
lots,  advising  them  to  speculate  before  the  price  of  land  rose  higher.** 

Not  only  Chicago  town  lots,  but  the  lots  of  five  hundred  Illinois 
towns,  many  of  which  never  existed  except  on  a  plat  and  are  now  corn 
fields,  were  offered  for  sale  in  Chicago.86  Chicago  was  "the  hatching 
place  of  the  brood  of  western  towns";  it  was  the  center  of  a  speculative 
whirlpool  whose  character  and  scope  is  thus  vividly  described  by 
Joseph  N.  Balestier: 

But  the  few  miles  that  composed  Chicago  formed  but  a  small  item  among  the 
subjects  of  speculation.  So  utterly  reckless  had  the  community  grown  that  they 
chased  every  bubble  that  floated  in  the  speculative  atmosphere ;  madness  increased 
in  proportion  to  the  foulness  of  its  aliment;  the  more  absurd  the  project,  the  more 
remote  the  object,  the  more  madly  were  they  pursued.  The  prairies  of  Illinois,  the 
forests  of  Wisconsin  and  the  sand  hills  of  Michigan  presented  a  chain  almost  un- 
broken of  supposititious  villages  and  cities.  The  whole  land  seemed  staked  out 
and  peopled  on  paper.  If  a  man  were  reputed  to  be  fortunate,  his  touch,  like  that 
of  Midas,  was  supposed  to  turn  everything  into  gold,  and  the  crowd  entered  blindly 

**  Ibid.,  p.  150,  sec.  35. 

83  James  William  Putnam,  The  Illinois  and  Michigan  Canal  (Chicago,  1918),  p.  41. 

84  Moses  and  Kirkland,  op.  cit.,  I,  96. 

85  Reminiscences  of  Early  Chicago  (1912),  pp.  27-28. 

86  William  Vipond  Pooley,  "The  Settlement  of  Illinois  from  1830  to  1850,"  Bulletin  of 
the  University  of  Wisconsin,  No.  220  (1908),  pp.  278-79. 


THE  CANAL  LAND  BOOM  31 

into  anything  he  might  originate.  These  worthies  would  besiege  the  land  offices 
and  purchase  town  sites  at  a  dollar  and  a  quarter  per  acre,  which  in  a  few  days  ap- 
peared on  paper,  laid  out  in  the  most  approved  rectangular  fashion,  emblazoned 
in  glaring  colors,  and  exhibiting  the  public  spirit  of  the  proprietor  in  the  multitude 
of  their  public  squares,  church  lots  and  school  lot  reservations.  Often  was  a  ficti- 
tious streamlet  seen  to  wind  its  romantic  course  through  the  heart  of  an  ideal  city, 
thus  creating  water  lots  and  water  privileges.  But  where  a  real  stream,  no  matter 
how  diminutive,  did  find  its  way  to  the  shore  of  the  lake — no  matter  what  was  the 
character  of  the  surrounding  country — some  wary  operator  would  ride  night  and 
day  until  the  place  was  secured  at  the  government  price.  Then  the  miserable  waste 
of  sand  and  fens  which  lay  unconscious  of  its  glory  on  the  shore  of  the  lake  was  sud- 
denly elevated  into  a  mighty  city,  with  a  projected  harbor  and  lighthouse,  railroads, 
and  canals,  and  in  a  short  time  the  circumjacent  lands  were  sold  in  lots  of  50  by 
100  feet,  under  the  name  "additions."  Not  the  puniest  brook  on  the  shore  of  Lake 
Michigan  was  suffered  to  remain  without  a  city  at  its  mouth  and  whoever  will 
travel  around  that  lake  shall  find  many  a  mighty  mart  staked  out  in  spots  suitable 
only  for  the  habitations  of  wild  beasts.87 

Within  the  present  city  limits  of  Chicago,  Figure  5  shows  town  sites 
were  laid  out  in  1836  at  Canalport  (Ashland  Avenue  from  Twenty- 
second  to  Thirty-first  street),  Cottage  Grove  (Thirty-first  Street  and 
the  lake),  Calumet  (Ninety-fifth  Street  and  the  lake),  and  Summit 
(Fifty-first  and  Harlem  Avenue,  just  outside  the  present  city  limits), 
all  of  these  being  either  on  the  Lake  or  on  the  route  of  the  proposed 
canal.  The  supply  of  lots  near  Chicago  was  increased  in  1836  by  the 
subdivision  of  Fractional  Section  15  (from  Madison  Street  to  Roose- 
velt Road,  State  Street  to  Michigan  Avenue),  and  by  the  opening  of 
Carpenter's  Addition  (northwest  corner  of  Madison  and  Halsted 
streets)  and  Duncan's  Addition  (northeast  corner  of  Halsted  and 
Roosevelt  Road).  Fractional  shares  of  unsubdivided  lands  amounting 
to  as  little  as  one-thirty-second  of  a  quarter-section  were  bought  and 
sold.  "Every  man  who  owned  a  garden  patch  stood  on  his  head  and 
imagined  himself  a  millionaire."88 

The  method  in  which  a  boom  psychology  is  generated  within  a  close 
compass  by  the  interaction  between  minds  obsessed  with  the  same 
beliefs  was  as  well  illustrated  in  1836  as  in  later  periods  of  speculative 
enthusiasm,  as  the  following  account  shows: 

A  powerful  auxiliary  to  the  speculative  spirit  was  the  sale  of  lands  by  auction. 
Where  bodies  of  men,  actuated  by  a  common  motive,  assemble  together  for  a  com- 
mon object,  zeal  is  apt  to  run  to  enthusiasm  when  the  common  passion  is  artfully 

8?  Andreas,  op.  cit.,  I,  135.  88  Ibid.,  p.  137. 


MAP  OF  CHICAGO 

-  SHOWING  - 


ORIGINAL  SUBDIVISIONS 
1830  TO  1843 


LEGEND  FOR  DATA 

TOWN  OF  CHICAGO 


HER.  ROBERTS  AOOlTlON  It}) 
WOLCOTT  S  ADDITION     1635 
BUSHMELL'S  ADDITION    l«3» 

NTER'S   ADDITION   !»}• 
(£)  FRACTIONAL  SECTION   IS  ADDITION    183ft 

CANAL  TRUSTEES  SUBDIVISION  S3TM  R>4    1C) 
©DUNCAN-! 

PORT  (VACATED  LATER 


CALUMET  AND  CEORCt     l«36 
(.VACATED  LATER) 

(M)TOWN  or  COTTAGE  GROVE  (VACATED  LATER) ift3 
OS)TOWN  or  SUMMIT  laa? 


FIG. 


THE  CANAL  LAND  BOOM  33 

inflamed  by  a  skillful  orator,  enthusiasm  becomes  fanaticism,  and  fanaticism,  mad- 
ness. Men  who  wish  to  be  persuaded  are  already  more  than  half  won  over,  and  an 
excited  imagination  will  produce  almost  any  anticipated  result.  Popular  delusions 
have  carried  away  millions  at  a  time,  mental  epidemics  have  raged  at  every  period 
of  the  world's  history  and  conviction  has  ever  been  potent  to  work  miracles.  Now 
the  speculating  mania  was  an  epidemic  of  the  mind,  and  every  chord  struck  by  the 
chief  performers  produced  endless  vibrations,  until  the  countless  tones  of  the  full 
diapason  broke  forth  into  maddening  strains  of  fascination.  The  auctioneers  were 
the  high  priests  who  sacrificed  in  the  Temple  of  Fortune,  through  them  the  specu- 
lators spread  abroad  their  spacious  representations.  Like  the  Sibyls  and  Flamens 
of  old  they  delivered  false  oracles  and  made  a  juggle  of  omens  and  auguries.89 

Thus  the  dazzling  tales  of  fortunes  quickly  made,  the  pyramiding  of 
land  profits  made  possible  by  the  constant  emission  of  state  bank  notes 
that  created  an  ever  higher  structure  of  land  values  and  the  reports 
of  the  national  speculative  mania  that  were  circulated  by  every  traveler 
were  used  by  skilful  auctioners  to  raise  local  buyers  to  the  highest  pitch 
of  excitement.  Figures  6  and  7  show  some  of  the  detailed  sales  of  lots 
and  acreage  tracts  at  the  peak  in  1836.  These  prices  may  be  compared 
with  the  initial  prices  in  1830  of  $100  for  the  best  town  lot  and  $1.25  an 
acre  for  quarter-sections  adjacent  to  the  present  "Loop."  To  present  a 
picture  of  the  changes  in  land  values  in  that  period  for  the  entire  area 
within  the  present  city  limits,  an  estimate  of  the  total  value  has  been 
made  on  the  basis  of  these  sample  sales. 

A  survey  of  the  summit. — By  the  summer  of  1836  the  total  sales  value 
of  the  land  in  the  present  city  limits  of  Chicago  had  increased  from  the 
$168,800  value  of  1830  to  $10,500,000,  a  rise  of  over  sixty  fold.  Of  this 
amount  56  per  cent,  or  5,900,000,  represented  the  value  of  the  2.5 
square  miles  within  a  mile  of  State  and  Madison  streets.  At  the  prices 
prevailing  on  June  20,  1836,  the  whole  of  the  Original  Town  alone  was 
worth  $2,650,000  and  the  School  Section  which  had  sold  for  $38,000  in 
1833  had  advanced  in  value  to  $i,2oo,ooo.9°  The  average  advance  on 
these  tracts  had  been  a  thousand  fold  since  1830,  and  the  lots  along  the 
river  had  exceeded  even  this  startling  rate  of  increase.  The  highest 
values  had  been  reached  at  South  Water  and  Dearborn,  where  a  3.5- 
acre  block  at  the  drawbridge  over  the  river  had  reached  an  aggregate 
value  of  $152,000,  and  at  LaSalle  and  South  Water,  where  two  lots 
were  reported  to  have  sold  together  for  $ioo,ooo.91  Successive  blocks 

8»  Ibid .,  p.  135. 

90  See  Figs.  71  and  73  for  detailed  sales  and  valuations  of  1830-36. 

"  Andreas,  op.  cit.,  I,  137. 


MAP  OF  CHICAGO 

-SHowiNG- 


VALUES  -1836 

AVERAGE  VALUES  FOR  EACH  SQUARE  MILE  IN  DOLLARS  PER  ACRE 
SOURCE'  ACTUAL  SALES 


* • 1 ',.1-5-      15    j     20  !    20    j    20   j    25 


FIG.  6 


MAP  OF  CHICAGO 

-SHOWING- 
LAND  VALUES -1 836 
INDICATED  BY  SALES  OF  ACRE  TRACTS 


LEGEND 


LOCATION  AND  EXTENT  OF  AREAS  SOLD. 
THE  PRICE  IN  DOLLARS  PER  ACRE  IS 
INDICATED  BY  THE  FIGURE  IN  THE  SAME 
SQUARE  MILE  SECTION 


<H  STffffT 

n  truce r 


FIG.  7 


36  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

southward  from  State  and  South  Water  streets  had  sold  at  the  rate  of 
$100,000  for  whole  blocks  at  Randolph,  $46,000  at  Washington,  $23,000 
at  Madison,  and  $6,000  at  Roosevelt  Road.  On  the  North  Side  the 
most  valuable  lots  were  on  the  north  bank  of  the  river,  where  entire 
blocks  ranged  in  value  from  $50,000  to  $100,000,  north  of  which  they 
declined  sharply  in  value.  On  the  West  Side  in  the  Original  Town  the 
highest  values  again  were  to  be  found  in  the  blocks  next  to  the  river, 
a  block  on  the  south  branch  at  Lake  Street  being  valued  at  $70,000  and 
successive  blocks  going  westward  to  Desplaines  declining  to  $29,000, 
$19,000,  and  $i4,5oo.92 

For  these  high  values  there  was  some  income  justification,  for  stores 
in  the  best  locations  near  Dearborn  and  South  Water  rented  for  from 
$1,000  to  $1,500  a  year  in  i836,93  but  with  interest  rates  at  not  less  than 
10  per  cent  per  annum  on  the  best  security,  it  was  observed  at  the  time 
that  this  income  was  overcapitalized. 

The  next  belt  of  6.5  square  miles,  or  4,140  acres,  that  formed  a 
hollow  square  a  mile  wide  around  the  inner  center  reached  an  average 
value  of  $500  an  acre,  or  slightly  over  $2,000,000,  by  the  summer  of 
1836.  This  represented  an  increase  of  four  hundred  fold  for  this  vacant 
area  since  1830.  The  land  in  the  n -square-mile  belt  (7,000  acres)  that 
was  from  2  to  3  miles  from  State  and  Madison  streets  rose  in  value 
nearly  one  hundred  times  to  an  average  of  $116  an  acre,  or  a  total  of 
$816,640  by  1836.  The  land  in  the  i4.5-square-mile  belt  (9,220  acres) 
that  was  from  3  to  4  miles  from  State  and  Madison  streets  advanced  to 
an  average  value  of  $50  an  acre,  and  a  total  value  of  $416,000,  an 
average  increase  of  forty  fold  since  1830. 

Finally,  all  of  the  175  square  miles  within  the  present  city  limits  that 
were  farther  than  4  miles  from  State  and  Madison  streets,  representing 
over  80  per  cent  of  the  present  area  of  the  city,  attained  an  average 
value  of  only  $12.50  an  acre  by  the  fall  of  1836,  an  average  advance  of 
tenfold.  While  tracts  in  this  belt  lying  nearest  the  lake  and  the  town 
had  risen  as  high  as  twenty  and  forty  fold,  great  areas  8  or  10  miles  from 
the  center  of  town  were  valued  at  but  little  more  than  the  original  gov- 
ernment minimum  price  of  $1.25  an  acre.  Apparently  even  the  most 
vivid  speculative  imagination  of  that  time  could  not  conceive  of  a  city 

92  See  maps  of  the  Original  Town  giving  sales  for  lots  in  each  block  (Figs.  73  and  74). 

93  Chicago  American,  July  9,  1836. 


THE  CANAL  LAND  BOOM  37 

that  would  grow  so  far  from  the  river  and  the  lake  that  these  acres 
would  be  needed  for  urban  use.  These  112,000  acres,  therefore,  had  a 
value  of  only  $1,400,000  in  1836,  or  only  13  per  cent  of  the  total  land 
value  of  Chicago,  although  they  embrace  over  80  per  cent  of  its  present 
area. 

Thus  in  the  first  land  boom  of  1836,  values  rose  to  the  peak  along  the 
Chicago  River  and  its  branches,  where  land  was  worth  eight  to  ten 
times  as  much  as  land  half  a  mile  back,  twenty-five  times  as  much  as 
land  a  mile  away,  two  hundred  times  as  much  as  land  two  miles  away, 
fifteen  hundred  times  as  much  as  land  seven  miles  away,  and  twenty- 
five  hundred  times  as  much  as  land  ten  miles  away. 

The  lull. — The  course  of  prices  indicates  that  the  period  of  most  rapid 
advances  in  values  ended  in  July  of  1836,  but  that  a  slow  advance  was 
maintained  up  to  the  very  end  of  the  year.94  On  June  20,  1836,  the  bids 
on  the  lots  in  the  Original  Town  in  most  cases  exceeded  even  the  high 
valuation  placed  upon  them  by  the  Canal  Commissioners,95  but  on 
September  5,  1836,  the  bids  on  the  lots  then  offered  for  sale  fell  short  of 
the  Commissioners'  appraisals.  For  some  months  there  was  a  lull,  in 
which  the  volume  of  sales  greatly  declined,  during  which  speculators 
sought  to  perpetuate  the  high  plateau  of  values  that  had  been  estab- 
lished by  the  last  sales.  Even  on  May  26,  1837,  William  B.  Ogden 
wrote  that  "my  sales  this  spring  thus  far  amount  to  over  $12,000  at 
full  last  year's  prices,"96  indicating  that  the  peak  of  values  was  being 
maintained  with  difficulty  at  that  time. 

The  forces  of  depression. — On  the  eve  of  a  severe  financial  crisis,  the 
state  of  Illinois  on  February  27,  1837,  had  recklessly  plunged  into  a 
program  of  internal  improvements  which  called  for  gridironing  the 
state  with  1,341  miles  of  railroads  at  an  estimated  cost  of  $10,250,00  for 
which  state  bonds  were  to  be  issued.  All  parts  of  the  state  had  de- 
manded a  share  in  the  benefits  which  the  Illinois  and  Michigan  canal 
was  expected  to  confer  on  the  Chicago  region,  with  the  result  that  the 

94  "Speculation  reached  its  height  in  the  latter  part  of  1836"  (Norris,  Business  Directory 
and  Statistics  of  the  City  of  Chicago,  1846  [reprinted  by  the  Fergus  Printing  Co.,  Chicago, 
in  1883],  p.  53). 

9s  Chicago  American,  July  23,  1836. 

»6  Letter  to  Frederick  Bronson,  May  26,  1837  (William  B.  Ogden,  Letter  Books,  I,  22 
[original  in  the  Chicago  Historical  Society]).  In  the  same  letter  Ogden  also  says:  "I  know 
of  no  sales  or  very  few  at  full  prices  except  some  that  I  now  and  then  make  because  of  being 
able  to  suit  the  purse  and  give  the  time  that  persons  applying  desire." 


38  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

success  of  that  undertaking  was  jeopardized  and  the  credit  of  the  state 
impaired  by  a  program  too  great  for  its  existing  resources.  At  first 
money  was  borrowed  in  New  York  and  from  the  United  States  Bank  in 
Philadelphia  to  carry  on  the  scheme,  and  then  when  no  more  bonds 
could  be  sold,  the  legislature  increased  the  capital  of  the  Bank  of  Illinois 
of  Shawneetown  by  $1,400,000  and  that  of  the  State  Bank  of  Illinois 
by  $2,000,000  and  required  these  banks  to  exchange  this  additional 
capital  stock  for  state  bonds.  Thus  the  project  of  the  Illinois  and  Mich- 
igan canal  upon  which  the  hopes  of  Chicago  depended  became  inter- 
woven with  a  grand  plan  of  internal  improvements.  The  fate  of  that  in 
turn  became  involved  in  the  fate  of  the  state  banks  and  the  state  bonds. 

Meanwhile,  the  existing  volume  of  currency  pouring  forth  from  the 
banks  to  sustain  the  expanded  structure  of  land  values  was  greater  than 
could  be  redeemed  in  specie.  As  early  as  May,  1836,  the  secretary  of  the 
Treasury  had  issued  an  order  directing  the  land  offices  to  refuse  to  ac- 
cept the  bills  of  non-specie-paying  banks  in  payment  for  public  lands. 
In  the  beginning  of  May,  1837,  there  was  a  general  tightening  of  the 
money  market  followed  by  a  suspension  of  specie  payments  by  the 
banks  of  New  York,  which  swept  southward  and  westward  until  it 
reached  St.  Louis  by  May  22. 97  On  May  29,  1837,  the  Illinois  banks 
voted  to  suspend  specie  payments  for  an  indefinite  period,  and  the  state 
legislature  acquiesced  in  this  suspension  by  a  special  act. 

Under  these  conditions  it  soon  became  impossible  to  borrow  money 
on  real  estate  or  to  renew  existing  loans.  Ogden  reported  in  a  letter  of 
May  26,  1837,  that  "money  is  very  scarce  indeed,"  but  by  November 
23,  1837,  he  was  obliged  to  write  that  "I  am  not  aware  that  a  loan  of 
money  can  be  obtained  of  anyone  here  or  elsewhere  at  this  time  at  any 
rate  of  interest."98  The  sales  at  the  land  office  in  Chicago  which  had 
amounted  to  370,043  acres  in  1835  and  436,992  acres  in  1836  dropped 
to  15,618  acres  in  1837."  Still  there  were  as  yet  no  distress  sales  and  no 
drastic  declines  in  land  values.  In  1838  business  improved  temporarily 
and  the  Illinois  banks,  after  a  suspension  of  thirteen  months,  resumed 
specie  payments  on  August  13,  i838.IO°  Only  17,640  acres  were  sold  by 
the  Chicago  land  office  in  1838,  however,  and  very  few  sales  were  made 
in  Chicago  itself. 

97  Dowrie,  op.  cit.,  p.  83. 

9» Letter  to  A.  McGregor,  November  23,  1837  (Ogden,  op.  cit.,  I,  55  [original  in  the  Chi- 
cago Historical  Society]). 

99  Pease,  op.  cit.,  p.  176.  "»  Dowrie,  op.  cit.,  p.  87. 


THE  CANAL  LAND  BOOM  39 

The  sharp  decline. — Another  financial  crisis  swept  through  the  coun- 
try in  the  autumn  of  1839,  however,  and  after  the  news  of  the  suspen- 
sion of  banks  in  the  East  had  reached  Springfield,  the  Illinois  banks 
again  suspended  specie  payments  on  October  20,  i839.101  Local  condi- 
tions in  the  meantime  had  grown  much  worse,  for  the  State  Bank  of 
Illinois  which  had  been  relied  upon  to  make  profits  to  sustain  the  credit 
of  the  state  and  to  carry  on  the  work  of  internal  improvements  had 
lost  $1,000,000  in  an  attempt  to  corner  the  lead  market  in  1839,  and  the 
state,  in  addition  to  a  $5,000,000  debt  incurred  in  digging  the  canal, 
had  spent  $6,000,000  on  its  other  projects  of  internal  improvements 
which  ultimately  yielded  it  nothing.103  That  real  estate  values  had  de- 
clined drastically  could  no  longer  be  concealed  by  1839.  The  extent  of 
the  decline  was  revealed  when  the  government  insisted  on  selling  the 
Fort  Dearborn  reservation — the  land  north  of  Madison  Street  and  east 
of  State  Street — in  the  depressed  market  of  i839103  and  received  from 
$200  to  $500  a  lot,  or  a  total  of  $100,000  for  land  that  would  have 
brought  over  $900,000  in  1836.  Ogden  in  the  latter  part  of  1839  valued 
the  southwest  corner  of  Dearborn  and  Randolph,  which  had  sold  for 
$7,800  in  1836,  at  $350  at  a  fair  valuation  and  $200  at  a  forced  sale, 
saying  that  "I  have  valued  this  property  hitherto  at  higher  rates  than 
now  ....  but  when  no  one  has  any  money  to  buy  property  at  any 
price  without  reference  to  what  will  be  its  conceded  value  after  a  little 
change  in  an  extreme  condition  of  things,  it  at  least  seems  questionable 
as  to  the  propriety  of  estimating  it  at  the  merely  nominal  price  which  it 
will  bring  at  the  present  moment."104  In  November,  1839,  Ogden  esti- 
mated that  the  best  business  property  had  declined  75  per  cent  in 
value  since  1836  and  that  outlying  lands  had  fallen  from  90  to  95  per 
cent  from  the  peak  prices.105 

Except  for  the  Fort  Dearborn  Addition,  arbitrarily  dumped  on  the 
market  by  government  order,  there  were  no  new  subdivisions  from  1837 

101  Ibid.  Ma  Ibid.,  p.  88. 

I(*  Letter  of  William  B.  Ogden  to  Charles  Butler,  June  17,  1839  (Ogden,  op.  cit.,  II,  105) : 
"The  very  low  price  at  which  the  Beaubien  property  [i.e.,  the  Fort  Dearborn  reservation] 
has  been  selling  during  this  and  the  past  week,  will  for  the  present  stop  all  sales  of  other  lots 
except  at  greatly  depressed  prices." 

104  Letter  to  M.  J.  Williams,  January  10,  1840  (ibid.,  p.  310  [original  in  the  Chicago  His- 
torical Society]). 

1(*  Letter  to  Charles  Butler,  June  1 7, 1839  (ibid .,  p.  106) :  "One  fourth  of  1836  prices  can 
hardly  be  obtained  for  much  business  property  at  this  time  and  one  loth  to  a  20th  is  about 
all  out  town  property  will  bring  or  is  worth  compared  to  sales  of  1836." 


40  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

to  1843.  Tne  three  square  miles  already  cut  up  into  lots  provided 
enough  land  for  at  least  fifty  thousand  people  when  there  were  only 
four  thousand  in  the  city.106  "Town  lots"  became  a  cry  of  derision,  and 
the  fate  of  much  of  this  property  was  pointed  out  by  a  reporter  who 
observed : 

In  taking  a  stroll  last  week  up  the  beautiful  avenue,  Clark  Street  beyond  the 
School  Section  [i.e.,  south  of  Roosevelt  Road],  we  observed  a  considerable  portion 
of  the  beautiful  prairie,  which  in  the  eventful  days  of  speculation  was  staked  out 
and  held  as  thousand  dollar  city  lots  without  bringing  in  a  cent,  is  now  plowed  up 
for  potato  patches  and  purposes  of  cultivation.10? 

The  bottom  had  not  yet  been  reached,  however,  nor  the  extent  of  the 
land-buyer's  ruin  fully  realized.  It  had  become  increasingly  difficult  to 
keep  the  work  on  the  canal  going,  the  other  schemes  of  internal  im- 
provements were  breaking  down,  and  the  credit  of  the  state  and  the 
state  banks  was  sinking  lower  and  lower.  In  January,  1840,  Ogden 
wrote  as  follows: 

No  satisfactory  valuation  can  be  fixed  on  the  three  lots  at  this  time  because  there 
are  no  purchases  of  real  estate  generally  in  this  vicinity  except  for  immediate  use, 
and  a  future  demand  for  this  property  is  based  chiefly  upon  the  completion  of  the 
canal,  which  is  at  present  of  very  uncertain  result.108 

Again  he  writes  at  about  the  same  time : 

It  is  not  at  all  the  town  it  was,  though  the  exterior  has  increased  in  beauty  ma- 
terially. That  buoyancy  of  feeling  and  liberal  and  generous  bearing  of  its  people 
have  given  way  to  a  close,  calculating  and  care-worn  spirit.  Its  ancient  dynasty 
have  mostly  fallen  and  men  and  families  of  more  recent  date  seem  a  good  deal  in  the 
ascendant.  It  seems  as  if  there  was  scarce  one  left  to  escape  the  blight  and  mildew 
of  1836.  Either  as  principal  or  endorser  or  from  confidence  unworthily  bestowed, 
all  suffer  and  too  often  to  their  ruin."* 

The  bottom. — By  1841  and  1842  the  extreme  low  ebb  of  state  finances 
and  of  Chicago  land  values  had  been  reached.  The  contractors  who 
were  digging  the  canal  accepted  checks  of  the  Commissioners  bearing 
6  per  cent  interest  in  lieu  of  cash,  and  in  1840  accepted  $1,000,000 

106  Three  square  miles  or  1,920  acres  or  19,200  lots,  25  by  125  feet,  would  provide  resi- 
dential land  enough  for  nearly  100,000  persons  if  a  family  of  five  lived  on  each  lot.  Since 
there  was  an  average  of  ten  persons  to  each  residential  building  in  Chicago  in  1837,  and  most 
of  the  population  live  on  100  acres  of  land,  this  estimate  of  the  number  of  people  that  could 
be  housed  on  the  subdivided  land  is  conservative. 

107  Chicago  American,  April  22,  1839. 

108  Letter  to  J.  W.  Seaver,  January  14,  1840  (Ogden,  op.  cit.,  II,  317  [original  in  the  Chi- 
cago Historical  Society]). 

""Letter  to  Captain  James  Allen,  January  15,  1840  (ibid.,  p.  321). 


THE  CANAL  LAND  BOOM  41 

worth  of  state  bonds  at  par  when  they  were  at  a  discount  of  15  per 
cent;110  but  when  the  state  failed  in  May,  1841,  to  provide  any  further 
means  for  financing  the  canal,  practically  all  the  work  came  to  an  end 
in  November,  1841.  The  State  Bank  of  Illinois  failed  in  February, 
1842,  and  by  April,  1842,  the  value  of  its  notes  had  fallen  from  85  cents 
to  44  cents  on  the  dollar.111  The  state  now  owed  $14,000,000,  and  with 
widespread  demands  for  repudiation  of  its  debt,  its  bonds  dropped  by 
June,  1842,  to  1 8  cents  on  the  dollar,112  while  the  bills  of  the  State  Bank 
sold  for  34  cents  on  the  dollar  at  the  same  time.  The  Bank  of  Illinois 
of  Shawneetown  also  suspended  its  operations  in  June,  1842,  and  soon 
thereafter  the  whole  program  of  internal  improvements  was  abandoned. 

When  the  work  on  the  canal  stopped,  one  paper  announced,  " Specu- 
lation has  received  its  deathblow."  Foreclosures  had  constantly  in- 
creased until  the  banks  of  Illinois,  which  held  only  $8,296  worth  of  real 
estate  in  1836  and  only  $57,138  worth  in  1839,  had  acquired  by  fore- 
closure land  to  the  value  of  $534,421  by  1841,  and  land  worth  $1,243,- 
327  by  i843.113  The  buyers  of  canal  lots,  unable  to  meet  their  payments 
in  1837,  had  their  time  of  payment  extended  by  special  act  of  the  legis- 
lature in  1837.  As  this  relief  was  of  little  avail  by  the  time  land  values 
had  declined  drastically,  the  legislature  again  came  to  their  relief  in 
1841,  first  by  deducting  one- third  from  the  price  they  had  agreed  to 
pay  in  1836,  and,  second,  by  allowing  them  to  apply  all  the  money  they 
had  paid  in  toward  the  full  payment  of  one  lot  or  one  portion  of  a  lot,  so 
they  received  a  clear  title  to  at  least  one  piece  of  land  in  return  for  what 
they  had  spent."4 

A  survey  at  the  bottom. — The  bottom  was  reached  in  1842. IIS  The  to- 

110  Putnam,  op.  cit.,  p.  285. 

111  Dowrie,  op.  cit.,  p.  103;  Sangamon  Journal,  April  8,  1842 

112  Chicago  Democrat,  June  8,  1842. 

"3  Report  of  the  Comptroller  of  the  Currency  (1876),  p.  118. 

"4  Laws  of  Illinois,  1841  (i2th  General  Assembly;  Springfield,  1841),  pp.  49-51. 

115  Colbert  estimates  that  they  dropped  to  5  per  cent  of  the  1836  peak:  "The  next  year 
[1841]  work  was  suspended  on  the  canal  and  the  situation  became  more  gloomy  than  ever, 
real  estate  being  offered  at  less  than  5  per  cent  of  the  price  paid  in  1836"  (Colbert  and 
Chamberlin,  Chicago  and  the  Great  Conflagration,  p.  i);  "In  1842  real  estate  had  but  little 
value,  and  everybody  would  have  been  rid  of  it  but  nobody  else  would  take  it,  and  so  being 
obliged  to  keep  what  they  had,  an  abundance  of  people  were  made  rich  in  spite  of  them- 
selves" ("Fergus  Historical  Series,"  No.  5,  Part  II,  p.  16:  "Life  of  Benj.  W.  Raymond"); 
William  Bross,  History  of  Chicago,  p.  17:  "Real  estate  went  down  to  a  very  low  figure, 
reaching  bottom  in  1842." 


42  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

tal  land  value,  according  to  sales,  in  the  Chicago  region  had  dropped 
from  the  $10,000,000  level  of  1836  to  $i,4oo,ooo."6  Except  for  the  dis- 
tant land  near  the  present  city  limits  that  had  hardly  risen  at  all  in  the 
boom  of  1836,  the  shrinkage  in  land  values  had  been  remarkably 
uniform.  Land  values  within  the  first-mile  belt  dropped  from  $5,901,- 
ooo  to  $810,000,  in  the  second-mile  belt  from  $2,070,000  to  $207,000, 
in  the  third-mile  belt  from  $817,000  to  $70,000,  in  the  fourth-mile  belt 
from  $461,000  to  $46,000,  and  in  the  outer  belt  from  $1,400,000  to 
$269,000. 

The  value  of  the  best  business  location  in  Chicago,  on  Lake  and 
Clark,  did  not  exceed  $100  a  front  foot  in  1842,  while  most  of  the  land 
in  the  present  Loop,  north  of  Madison,  was  worth  no  more  than  $10  a 
front  foot  and  that  south  of  it  $2.00  or  $3.00  a  front  foot.  As  Figure  8 
shows,  acres  within  a  mile  of  State  and  Madison  were  worth  no  more 
than  $100  an  acre,  within  two  miles  they  dropped  to  $10  an  acre,  and 
beyond  four  miles  they  were  worth  not  over  $2.50  an  acre. 

The  aftermath. — The  effect  of  this  extreme  decline  in  land  values  was 
to  ruin  most  of  those  who  bought  land  in  Chicago  prior  to  1836.  John 
S.  Wright  lost  all  of  his  land,  valued  at  $200,000  during  the  boom  of 
1836,  and  worth  at  least  $1,000,000  in  1856,  because  of  his  inability  to 
meet  obligations  of  $25,ooo."7  Philo  Carpenter  parted  with  land  later 
worth  over  $1,000,000  to  satisfy  a  debt  of  $8,5oo."8  Ogden  wrote  on 
January  25,  1841: 

As  regards  Chicago,  everything  has  changed  mightily  since  you  left.  Property 
has  depreciated  monstrously.  It  often  happens  that  property  which  sold  for  hun- 
dreds, even  thousands,  is  not  now  worth  even  ten  dollars.  Those  too  who  were  the 

richest  when  you  left  are  of  the  poorest  now Very  few  of  the  old  stock  of  '36 

are  otherwise  than  deeply  embarrassed We  are  all  narrowed  to  picayune 

operations,  and  have  hard  work  to  make  our  ends  meet  and  get  our  daily  bread, 
cheap  as  it  is  now.  So  much  for  unhallowed  speculations.119 

As  the  reporter  for  the  Chicago  Journal  stated:  "When  reverses  came 
upon  our  business  men,  it  was  almost  a  universal  crash  and  ruin  that 
followed,  few  old  settlers,  those  who  had  borne  the  heat  and  burden  of 

116  Computed  by  the  writer  on  the  basis  of  sales. 

"7  Andreas,  op.  cit.,  I,  136,  John  S.  Wright,  Chicago,  Past,  Present,  Future  (Chicago? 
1870),  p.  290. 

118  Early  Chicago  and  Illinois  ("Chicago  Historical  Society's  Collection,"  Vol.  IV),  p.  1 19. 

"'  Letter  to  H.  Moore,  January  25,  i84i;(Ogden,  op.  cit.,  Ill,  159  [original  in  the  Chi- 
cago Historical  Society]). 


MAP  OF  CHICAGO 

-SHOWING - 

LAND  VALUES-I84I  TO  1843 
INDICATED  BY  SALES  OF  ACRE  TRACTS 


LEGEND 


LOCATION  AND  tXTENT  OF  AREAS  SOLD. 
THE  PRICE  IN  DOLLARS  PER  ACRE  IS 
INDICATED  BY  THE  FIGURE  IN  THE  SAME 
SQUARE  MILE  SECTION 


I        I 


FIG.  8 


44  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

the  day,  were  enabled  to  regain  themselves."120  Joseph  N.  Balestier 
melodramatically  described  the  debacle  in  the  following  words: 

But  the  day  of  retribution  was  at  hand,  the  reaction  came — and  the  professional 
speculator  and  his  victims  were  swallowed  up  in  one  common  ruin.  Trusting  to  the 
large  sums  due  him,  the  land  operator  involved  himself  more  and  more  deeply,  until 
his  fate  was  more  pitiable  than  that  of  his  defrauded  dupes. 

The  year  1837  will  ever  be  remembered  as  the  year  of  protested  notes 

Misery  inscribed  its  name  on  many  a  face  but  lately  radiant  with  high  hopes,  de- 
spair was  stamped  on  many  a  countenance  which  was  wont  to  be  wreathed  in  smiles. 
Broken  fortune,  blasted  hopes  and,  aye,  blighted  characters;  these  were  the  legiti- 
mate offspring  of  those  pestilent  times.  The  land  resounded  with  the  groans  of 
ruined  men,  and  the  sobs  of  defrauded  women  who  had  entrusted  their  all  to  the 
greedy  speculators.  Political  events,  which  had  hitherto  favored  these  wild 
chimeras,  now  conspired  to  hasten  and  aggravate  their  downfall.121 

Such  was  the  aftermath  of  the  boom  of  1836.  Land  values  had 
plunged  from  one  extreme  to  another,  and  in  the  depression  of  1841  and 
1842,  the  land  value  of  Chicago  was  too  cheap  not  merely  in  the  light 
of  its  subsequent  history  but  even  for  the  modest  prospects  of  a  county 
seat.  Those  who  had  suffered  so  severely,  however,  would  be  inclined  to 
put  a  damper  on  any  further  speculative  tendencies,  and  when  all  hope 
for  completing  the  canal  had  been  abandoned,  there  seemed  to  be 
nothing  to  look  forward  to  that  would  cause  land  values  in  Chicago  to 
move  upward.  As  Ogden  wrote  late  in  1841:  "The  suspending  of  the 
canal  and  the  bankruptcy  and  disgrace  entailed  by  the  wicked  and  wan- 
ton legislation  of  the  past  winter  have  put  another  face  of  deepened 
gloom  upon  the  values  of  property  here  and  will  work  a  perfect  dearth 
of  money  and  make  all  real  estate  in  the  main  unavailable."122 

120  March  27,  1845.  m  Andreas,  op.  cit.,  I,  135. 

122  Ogden,  op.  cit.  (original  in  the  Chicago  Historical  Society).  Note  also  the  effect  of  the 
suspension  of  the  canal  upon  population  and  rents  (letter  to  B.  Mager,  June  27,  1841 

[ibid .,  Ill,  326]) :  "Many  people  are  leaving  town Houses  are  vacant."  Letter  to 

Dr.  U.  Parsons,  June  7, 1841  (ibid.,  p.  323) :  "The  suspension  of  the  canal  has  reduced  rents 
this  year  greatly."  Originals  of  both  letters  are  in  the  Chicago  Historical  Society.  William  B. 
Ogden,  the  first  mayor  of  Chicago,  and  the  first  president  of  the  Chicago  Northwestern 
Railroad,  was  one  of  the  most  prominent  of  the  early  citizens  of  Chicago.  Ogden,  Utah  was 
named  after  him.  At  this  time  he  invested  large  sums  of  eastern  capital  in  western  lands. 


CHAPTER  II 
THE  LAND  BOOM  OF  THE  RAILROAD  ERA,  1843-62 

A.      THE  PERIOD  FROM  1843  TO  1848 

A  new  start  on  the  canal. — When  the  prospect  of  completing  the  Illi- 
nois and  Michigan  Canal,  apparently  involved  in  the  wreck  of  the 
state's  grandiose  scheme  of  banking  and  internal  improvements,  had 
been  abandoned,  the  death  knell  of  the  plans  of  Chicago  to  become  a 
great  metropolis  seemed  to  have  been  sounded.  The  value  of  its  real 
estate  sank  to  its  lowest  depths.  Of  all  the  projects  contemplated  by 
the  state,  however,  the  canal,  upon  which  over  $7,000,000  had  already 
been  spent,  was  the  only  one  that  had  been  pushed  far  toward  comple- 
tion. Moreover,  it  alone  possessed  in  its  own  right  any  assets,  it  still 
having  230,476  acres  of  land  and  3,491  town  lots  which  had  not  been 
sold  or  mortgaged  during  the  depression.1  Fortunately  for  the  canal 
and  for  Chicago,  three  different  groups  found  it  to  their  interest  to 
unite  to  complete  the  waterway.  These  were,  first,  the  citizens  of  Chi- 
cago, who  fondly  expected  that  the  canal  would  make  the  city  a  great 
emporium;  second,  the  bondholders,  who  had  already  sunk  their  money 
into  the  enterprise  and  who  by  putting  in  a  little  more  might  recover 
their  entire  investment;  and,  third,  the  state,  which  by  opening  up  a 
profitable  market  for  the  products  of  the  Illinois  River  Valley  would 
enable  the  farmers  to  pay  the  taxes  that  would  enable  the  state  to  meet 
its  obligations.  It  was  estimated  that  the  canal  could  be  completed  on 
the  shallow-cut  plan  at  an  additional  cost  of  $1,600,000,  and  to  procure 
this  sum  the  state  legislature  in  February,  1843,  authorized  the  gover- 
nor to  borrow  that  amount  on  the  security  of  the  canal  lands  and  tolls. 
As  an  inducement  to  the  old  bondholders  in  London  from  whom  it  was 
hoped  to  secure  most  of  the  money,  the  law  provided  that  if  the  holders 
of  the  original-canal  obligations  subscribed  to  the  new  loan,  the  princi- 
pal and  interest  of  their  old  obligations  would  be  repaid  from  the  pro- 
ceeds of  the  sales  of  the  canal  lands  and  from  canal  tolls  after  the  princi- 

1  James  William  Putnam,  The  Illinois  and  Michigan  Canal,  1918  (Chicago:  University 
of  Chicago  Press,  1918),  p.  58.  This  is  the  most  authoritative  work  on  the  subject  of  the 
Illinois  and  Michigan  Canal. 

45 


46  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

pal  and  interest  of  the  new  loan  had  been  paid.  Since  nearly  everyone 
believed  that  the  canal  lands  would  appreciate  in  value  after  the  com- 
pletion of  the  canal,  the  law  provided  that  none  of  the  canal  land  was 
to  be  sold  until  after  the  canal  was  finished,  but  that  thereafter  the  land 
was  to  be  offered  for  sale  at  least  once  a  year  for  four  years  after  the 
canal  was  opened,  at  prices  not  less  than  those  fixed  by  three  disinter- 
ested persons  in  each  district.2  On  these  overtures  from  the  state,  a 
committee  from  Baring  Brothers,  representing  the  old  bondholders,  in- 
vestigated the  financial  condition  of  the  canal  and  reported  that  on 
January  i,  1844,  it  had  a  net  debt  of  $4,847,402  and  countervailing 
assets  in  the  canal  itself  and  its  lands  and  lots  of  over  $9,000,000.  They 
accordingly  recommended  that  the  London  bondholders  advance  the 
sum  required  to  finish  it.3 

Before  the  complete  confidence  of  these  financial  interests  could  be 
won,  however,  it  was  necessary  not  merely  for  the  state  to  abandon  all 
its  other  projects  of  internal  improvements  and  to  begin  to  reduce  its 
debt  by  exchanging  its  stock  in  the  state  banks  for  the  state  bonds  held 
by  the  banks,  but  also  to  win  the  fight  against  repudiation  of  its  obliga- 
tions by  providing  in  1845  f°r  a  miU tax  to  pay  the  interest  on  its  public 
debt.  After  these  steps  had  been  taken  and  the  credit  of  the  state  had 
rapidly  improved  in  consequence,  the  new  loan  for  the  canal  was  ad- 
vanced in  1845.  With  the  joyful  shout  of  the  Chicago  Journal,  "Get  out 
your  spades  and  go  digging,"4  the  work  was  resumed.  As  wages  and 
the  price  of  materials  were  low  as  compared  with  the  high  levels  pre- 
vailing in  1836  and  1837,  the  funds  provided  proved  to  be  ample.  The 
long-deferred  task  was  now  pushed  to  completion  in  the  scheduled 
time  of  two  and  a  half  years. 

Growth  of  wagon  and  lake  traffic. — While  thus  being  encouraged  by 
the  prospects  of  better  transportation  facilities  in  the  future,  Chicago 
was  forging  slowly  ahead  as  a  meeting  place  of  wagon-hauled  and  lake- 
borne  commerce.  Prior  to  1837  the  territory  in  the  vicinity  of  Chicago 
did  not  raise  enough  food  for  its  support.  That  was  the  first  era. 
Charles  Cleaver  said: 

3  Laws  of  the  State  of  Illinois  (i3th  General  Assembly;  Springfield,  III,  1843),  PP-  54~58. 

3  Putnam,  "Economic  History  of  the  Illinois-Michigan  Canal,"  Journal  of  Political 
Economy,  XVII  (1909),  290,  quotes  Davis  and  Swift,  Report  of  the  Illinois-Michigan  Canal 
(1844),  p.  134. 

*  March  3,  1845. 


THE  RAILROAD  ERA  47 

From  that  time  to  1842  or  1843  farmers  began  to  raise  enough  produce  for  them- 
selves and  their  neighbors'  consumption  as  well  as  supplying  the  citizens  of  Chicago 
with  all  that  was  necessary,  but  these  years  began  to  show  the  necessity  of  having 
some  foreign  market  to  take  off  the  surplus  produce,  for  in  the  winter  of  1842  to 

1843  farmers'  produce  of  all  kinds  was  so  low  it  was  hardly  worth  raising 

Gradually  all  classes  of  produce  were  held  till  spring  for  shipment  round  the  lakes  by 
vessel  to  New  York;  this  would  end  the  second  era.s 

As  the  population  of  northern  Illinois  was  rapidly  increasing  and  its 
farm  lands  were  being  developed,  the  best  market  for  farm  produce  was 
in  Chicago.  There  the  highest  prices  in  the  West  were  paid  for  wheat 
that  was  shipped  to  the  East  on  lake  vessels  and  there  the  lowest  prices 
were  charged  for  salt,  cook  stoves,  lumber,  and  other  farm  necessities. 
The  relatively  lower  cost  of  lake  transportation  between  Chicago  and 
the  East  made  Chicago  grain  prices  only  a  little  less  than  those  in  New 
York  and  the  prices  of  eastern  wares  in  the  Chicago  stores  only  a  little 
more  than  at  the  point  of  their  origin.  The  greatest  part  of  the  expense, 
however,  was  involved  in  getting  the  wheat  or  produce  to  Chicago,  be- 
cause it  had  to  be  hauled  there  in  wagons  over  bad  roads. 

Farmers  living  on  Rock  River  would  take  five  days  to  market  thirty  bushels  of 
wheat,  finding  when  they  got  home  not  over  ten  or  twelve  dollars  left  out  of  the 
price  of  their  load,  but  for  some  purposes  they  had  to  have  a  little  cash  and  so  con- 
tinued to  bring  it.6 

Notwithstanding  the  difficulties  involved  in  this  long  movement  by 
wagons,  the  volume  of  wheat  thus  brought  to  Chicago  rapidly  increased. 
The  export  of  78  bushels  in  1838  had  mounted  to  40,000  bushels  by  1841 
and  587,000  bushels  in  1842.  Over  1,000,000  bushels  were  shipped  East 
in  1845  and  over  2,000,000  bushels  in  1847. 7 

In  addition  to  the  farmers  hauling  in  wheat  that  was  mainly  exported 
to  the  East,  there  were  the  farmers  from  the  Wabash  country  who 
brought  in  provisions  chiefly  for  local  consumption. 

There  was  also  another  class  of  farmers  from  the  south  that  used  in  a  measure 
to  supply  the  city  with  necessaries  in  the  shape  of  green  and  dried  apples,  butter, 
hams,  bacon,  feathers,  etc.  These  men  would  bring  their  loads  two  or  three  hundred 
miles,  camping  out  on  the  way.  Cooking  their  rasher  of  bacon  and  corn  dodgers, 
and  boiling  their  pot  of  coffee  over  the  campfire  and  saving  money  enough  out 
of  their  load  to  purchase  a  few  bags  of  coffee  and  the  balance  in  salt — this  was  the 

*  Reminiscences  of  Chicago  in  the  Forties  and  Fifties,  p.  74. 

6  Ibid.,  p.  75. 

7  Hunt's  Merchants'  Magazine,  1858,  p.  422. 


48  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

invariable  return  load  of  all  Hoosiers,  who  used  to  come  in  great  numbers  in  their 
curious  shaped  covered  wagons,  known  in  old  times  as  prairie  schooners — I  once 
counted  160  on  the  corner  of  State  and  South  Water  Street.8 

One  of  the  most  important  commodities  which  the  farmers  hauled 
back  in  their  wagons  was  lumber.  White-pine  timber  from  the  forests 
of  Michigan  was  brought  in  by  lake  vessels  to  make  good  the  deficiency 
of  the  prairie  states.  The  lumber  receipts  of  Chicago  increased  from 
7,500,000  board  feet  in  1843  to  19,000,000  board  feet  in  i8449  and 
32,000,000  board  feet  in  1847. 10  This  incoming  lumber  traffic  and  the 
outgoing  wheat  shipments  as  they  thus  mounted  rapidly  in  volume 
caused  an  increase  in  lake  tonnage  arriving  at  Chicago  from  117,711  in 
1842  to  459,910  in  1844." 

Even  in  the  forties  when  the  conditions  of  land  transportation  were 
most  difficult,  a  heavy  flow  of  people  and  goods  passed  through  Chica- 
go. Not  only  the  movement  of  farmers'  wagons,  which  increased  until 
70,000  teams  entered  Chicago  in  1847,  an  average  of  200  a  day,12  but 
the  arrivals  and  departures  of  emigrants  by  stagecoach  and  steamers 
brought  a  large  throng  of  transients  into  the  city.  In  1845  it  was  esti- 
mated that  four  steamboats  entering  and  leaving  Chicago  every  day 
carried  430  persons  or  92,000  during  the  seven  months  of  navigation, 
while  the  eight  stages  that  arrived  and  departed  daily  transported  120 
persons  a  day  or  43,800  a  year.13 

The  purchases  of  farmers  and  of  emigrants  at  the  stores  on  Lake 
Street  gave  rise  to  a  large  volume  of  retail  business  in  Chicago  prior  to 
1848. 

Previous  to  the  opening  of  the  canal,  the  communication  with  the  country  dis- 
tricts was  almost  altogether  by  farmers'  wagons  or  prairie  schooners.  In  the  fall 
after  the  harvest  and  threshing  season,  the  prairie  roads  leading  to  Chicago  from 
all  directions  were  lined  with  Hoosier,  cloth-covered  wagons.  In  the  city,  Lake 
Street  was  the  only  real  business  street  and  that  was  literally  packed  with  these 
wagons  threading  their  way  in  a  perfect  jam.  They  came  in  with  wheat,  corn,  oats 
and  all  other  farm  products  and  departed  with  a  cook  stove,  a  barrel  of  salt  or  a  few 

8  Cleaver,  op.  cit.,  p.  75. 

'  Norris,  City  Directory  for  1846,  p.  15. 

10  Hunt's  Merchants'  Magazine,  1858,  p.  428.  «  Ibid.,  p.  421. 

"  History  of  the  Board  of  Trade,  ed.  Charles  H.  Taylor  (Chicago:  Robert  O.  Law  &  Co., 
1917). 

13  Norris,  Directory  for  Chicago  for  1846,  p.  24. 


THE  RAILROAD  ERA  49 

boards  of  pine  lumber,  which  could  only  be  had  at  Chicago.  These  farmers  sup- 
plied a  very  large  part  of  the  retail  trade  of  Chicago.  Wholesale  trade  was  not  then 
known  as  such.1* 

The  demand  of  the  fanners  for  commodities  not  merely  increased  the 
retail  trade,  but  in  conjunction  with  lumber  imports  it  also  stimulated 
the  growth  of  such  wood  manufactures  as  wagons  and  agricultural  im- 
plements, McCormick  establishing  his  reaper  works  in  Chicago  in  1847. 
The  flow  of  grain  and  live  stock  into  Chicago  also  caused  the  develop- 
ment of  local  flour  mills,  breweries,  packing-houses,  soap  and  tallow 
plants. 

The  physical  growth  of  Chicago,  1843-48. — After  the  population  of 
Chicago  had  grown  from  5,000  in  1841  to  6,000  in  1842  and  8,000  in 
i844,IS  the  appearance  of  the  city  in  1844  was  thus  described: 

The  then  mighty  city  with  its  "teeming  multitudes"  of  8,000  people  was  strung 
along  the  banks  of  the  river  for  half  a  mile  from  the  lake.  It  hadn't  a  paved  street 
or  a  foot  of  brick  sidewalk.  The  business  part  of  the  town  was  Lake  Street  from 
State  to  Wells  Street,  and  the  residences  were  scattered  along  Wabash  and  Michi- 
gan and  State  to  Washington  Streets.  What  is  now  Madison  Street  was  out  of 
town.  South  of  where  the  Grand  Pacific  stands  was  an  unbroken  prairie.  There 
was  no  business  and  only  a  few  dwellings  north  of  the  river,  on  account  of  the  un- 
certainties and  delays  in  getting  back  and  forth.  There  was  no  sewerage  whatever 
and  the  water  and  the  surface  drainage  was  the  only  way  to  get  rid  of  sewage.  The 
mud  is  described  as  having  been  simply  horrible.  The  low  marshy  land  filled  with 
water  like  a  sponge  and  the  streets  were  well-nigh  impassable  for  eight  months  in 
the  year.16 

An  analysis  of  the  place  of  residence  reported  by  the  2,000  persons 
whose  names  appeared  in  the  city  directory  in  1844  shows  that  of  the 
1,200  giving  definite  addresses,  180  lived  in  hotels  and  275  in  boarding- 
houses  or  with  their  employers.17  Only  5  reported  living  south  of 
Adams  Street,  i  west  of  Clinton  Street,  and  7  as  far  north  as  Chicago 
Avenue.  There  was  a  concentration  of  residential  population  on  Ran- 
dolph and  Washington  streets,  from  State  to  Market  Street,  on  North 
Water  Street  from  LaSalle  to  Rush  Street,  and  on  the  West  Side  near 
the  Lake  Street  bridge.  Nearly  every  business  house  reporting  was 
either  on  Lake  Street  or  on  Clark  and  Dearborn  streets  between  Lake 
and  South  Water  streets.  There  were  twenty-five  commission  mer- 

'«  I.  W.  Waughop  in  Chicago  Tribune,  September  28,  1884. 

15  Charles  Colbert  in  Andreas,  op.  cit.,  II,  691. 

16  Chicago  Herald,  September  25,  1882.  '?  Norris,  City  Directory  for  1844. 


50          ONE  HUNDRED  YEARS  OF  LAND  VALUES 

chants  on  South  Water  Street.  The  lumber  yards  were  mainly  on  the 
south  side  of  the  river,  from  Wells  to  Randolph  Street. 

In  1844,  600  new  buildings  were  erected,  and  in  1845,  8?1-  The  popu- 
lation had  increased  from  8,000  in  1844  to  12,000  in  1845  and  14,000  in 
1846.  William  Bross  painted  the  following  picture  of  Chicago  in  1846: 

The  residence  portion  of  it  [Chicago  in  1846]  was  mainly  between  Randolph  and 
Madison  Streets,  and  there  were  some  scattered  houses  as  far  south  as  Van  Buren 
Street  in  the  South  Side,  four  or  five  blocks  north  of  the  river  on  the  North  Side, 
with  scattering  residences  about  as  far  on  the  West  Side.  There  were,  perhaps,  half 
a  dozen  wooden  warehouses  along  the  river  on  Water  Street.  The  few  stores  that 
pretended  to  be  wholesale  were  on  Water  Street,  and  the  retail  trade  was  exclusively 
done  on  Lake  Street.18 

The  growing  lumber  firms  were  locating  on  the  west  side  of  the  south 
branch  from  Lake  to  Washington  Street,  as  well  as  on  the  east  side  of 
the  south  branch  as  far  south  as  Washington  Street.  Foundries,  sash 
and  door  mills,  and  flour  mills  were  getting  started  on  the  West  Side  by 
1846.  Wagon  works  were  established  on  Randolph  near  Franklin  and 
Market  streets.  On  the  North  Side  was  a  shipyard  near  Rush  Street, 
iron  foundries  on  North  Water  from  Clark  to  Wells,  and  breweries  on 
the  lake  front  at  Illinois  Street  and  Chicago  Avenue.  The  growth  of  the 
South  Side  and  the  West  Side  in  population  was  greater  than  that  of  the 
North  Side  from  1843  to  1845,  as  Table  I  shows.19 

In  1846,  according  to  Norris,  three-fourths  of  the  ground  within  the 
city  limits  was  more  or  less  built  upon,  and  there  were  twenty  blocks 
that  were  compactly  occupied  with  buildings.  There  were  thirty- two 
large  brick  buildings  three  or  four  stories  in  height,  and  numerous 
blocks  of  wooden  buildings.30 

The  River  and  Harbor  Convention  held  in  Chicago  in  1847,  which 
brought  delegates  from  all  over  the  United  States  to  the  city,  was  one 
of  the  most  important  events  in  its  early  annals,  for  it  drew  the  atten- 
tion of  the  East  to  the  substantial  growth  of  Chicago  within  the  past 
decade. 

By  1848  the  West  Side  was  growing  fast  as  a  manufacturing  center. 
"The  West  Side  near  the  south  branch  of  the  canal  draws  houses, 
stores,  machine  shops,  planing  mills  toward  it  as  a  magnet  draws  iron 
filings,"  was  the  statement  appearing  in  the  "Gem  of  the  Prairie"  in 

18  Chicago  Tribune,  June  24,  1876. 

'»  Norris,  City  Directory  for  1846.  M  Ibid.,  p.  5. 


THE  RAILROAD  ERA 


1848."  The  fashionable  residential  areas  were  on  the  North  Side  on 
LaSalle  and  Dearborn  streets,  Case  and  Pine  streets,  and  on  the  South 
Side  on  Wabash  and  Michigan  avenues,  north  of  Madison  Street. 
Washington  had  developed  into  a  street  of  churches.  Madison  and 
Monroe  streets  in  the  present  "Loop"  were  occupied  by  small  houses 
surrounded  by  gardens.  Lake  Street  was  still  the  main  business  street. 
The  first  slums  and  vice  areas  were  developing  in  the  "sands"  north  of 
the  main  channel,  in  "Kilgubbin"  at  the  forks  of  the  north  branch,  and 
in  the  sections  west  of  Wells  Street,  south  of  Washington  Street  to  the 

river. 

TABLE  I 

POPULATION  OF  CHICAGO  BY  WARDS,  1837-45 


DA 

TE 

i837 

1840 

1843 

1845 

South  Side,  first  ward,  east  of  Clark  
South  Side,  second  ward,  west  of  Clark.  .  . 
West  Side,  third  ward,  south  of  Randolph 
West  Side,  fourth  ward,  north  of  Ran- 
dolph                     .    . 

i,  02  1 
1,309 
iQS 

2*8 

I>197 

1,467 

251 
170 

1,986 
2,231 
509 

A.1A 

3,238 
3,460 
1,009 

820 

North  Side,  fifth  ward,  west  of  Clark  .  .  . 

32O 

4.36 

600 

I    O^2 

North  Side,  sixth  ward,  east  of  Clark.  .  .  . 

918 

1,323 

1,840 

2,499 

Total 

A    I7o* 

A     gC7 

7    cgn 

12    088 

*  Includes  169  transients  not  enumerated  in  ward  totals. 

At  the  beginning  of  1848  Chicago  was  still  a  country  town  with  cows 
browsing  in  pastures  a  mile  from  the  city  hall,  and  occasionally  roaming 
through  the  main  business  street.  Hogs  recently  had  run  wild  in  the 
center  of  town,  and  wolves  had  been  seen  at  Wabash  and  Adams 
streets.  The  roads  had  not  been  improved  in  any  way,  as  the  following 
account  of  "Long  John"  Wentworth  shows: 

I  said  we  had  no  roads  in  1848.  The  streets  were  simply  thrown  up  as  country 
roads.  In  the  spring,  for  weeks  portions  of  them  would  be  impassable.  I  have  at 
different  times  seen  empty  wagons  and  drays  stuck  on  Lake  and  Water  Streets  on 

every  block  between  Wabash  Avenue  and  the  river The  clerks  having  little 

or  no  business  put  up  signs  on  mud  holes,  "no  bottom  here," — "the  shortest  road 
to  China" — or  stuck  up  a  figure  in  effigy  with  a  sign  "on  his  way  to  the  lower 
regions."23 

21  Chicago  Tribune,  July  10,  1887. 

22  Charles  Cleaver  gives  a  similar  account  in  Early  Chicago  Reminiscences  (Chicago : 
Fergus  Printing  Co.,  1882),  p.  28. 


52  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

Such  was  Chicago — a  town  without  pavements,  sidewalks,  sewers, 
gas  lights,  street  cars,  or  railroads  on  the  eve  of  the  influx  of  a  new 
series  of  transportation  agencies  that  were  to  transform  it  entirely. 

A  slow  rise  in  land  values. — In  1844  began  a  slow  increase  in  Chicago 
land  values,  which  was  at  first  confined  to  the  streets  close  to  the  main 
business  center.  A  lot  on  Randolph  Street  near  State  sold  for  $10  a 
front  foot  in  1842,  for  $15  a  foot  in  1844,  $50  a  foot  in  1846,  and  $80  a 
foot  in  i848.23  Wabash  near  Van  Buren  had  risen  to  $18  a  foot  by 
i848,34  and  Clinton  Street  near  Washington  Street  on  the  West  Side 
from  $1.50  to  $11  a  foot  from  1843  to  1847. 2S  Michigan  Avenue  near 
South  Water  (Lot  17,  Block  17,  Fort  Dearborn  Addition)  advanced  in 
value  from  $13  a  foot  in  1840  to  $50  a  foot  in  i848.26  State  Street  near 
Monroe  sold  for  only  $30  a  foot  in  1848,  although  this  was  five  or  six 
times  its  value  in  1843 ,27  In  ^48  vacant  lots  25  by  150  feet  in  the  busi- 
ness center  of  Chicago  could  be  rented  for  $250  a  year,  and  the  best 
four-story  brick  houses  (25  by  100  feet)  for  $800  a  year.28 

The  rise  in  land  values  in  the  outlying  acres  was  in  some  cases  barely 
perceptible  in  this  period.  Land  near  State  and  Roosevelt  Road  had 
reached  only  $250  an  acre  by  I845,29  and  Sixty-third  and  Stony  Island 
sold  for  $7.00  an  acre  in  1847. 3°  Roosevelt  and  Western  sold  for  $50  an 
acre  at  the  same  time  (1847)  ,31  and  Sixty-third  and  Cottage  Grove  for 
$4.50  an  acre.32  Irving  Park  and  Narragansett  brought  only  $7.00  an 
acre  in  i849.33  At  Ashland  and  Lawrence  land  was  only  $3.25  an  acre  in 
i847,34  at  Lawrence  and  the  Lake  $2.00  an  acre  in  i847,3S  and  at  Sixty- 
third  and  Halsted  streets  only  $7.00  an  acre  the  same  year.36  Such  ex- 
amples suffice  to  show  that  a  very  low  level  of  values  obtained  for  lands 
more  than  a  mile  from  State  and  Madison  prior  to  the  coming  of  the 
new  transportation  factors  from  1848  to  1854. 

*3  Shortall  and  Hoard's  Abstracts  (in  the  files  of  the  Chicago  Title  and  Trust  Co.),  Vol.  82, 
pp.  858-67. 

*4  Ibid.,  Vol.  60,  p.  848.  *6  Ibid.,  Vol.  39,  pp.  986-88. 

« Ibid.,  Vol.  44,  pp.  664-67.  v  Ibid.,  Vol.  41,  p.  962. 

28  M.  L.  Putney,  Real  Estate  Values  and  Historical  Notes  of  Chicago  (1900),  p.  121. 

29  Shortall  and  Hoard's  Abstracts,  Vol.  70,  p.  459. 
» Ibid.,  Vol.  72,  p.  437- 

31  Chicago  Title  and  Trust  Co.  Abstracts,  Vol.  1737,  p.  704. 

**  Ibid.,  Vol.  1154,  p.  353. 

33  Ibid.,  Vol.  1588,  p.  96.  35  ibid.,  Vol.  2061,  p.  61. 

"  Ibid.,  Vol.  3795,  p.  495.  &  Ibid.,  Vol.  657,  p.  666. 


THE  RAILROAD  ERA  53 

B.     THE  PERIOD  FROM  1848  TO  1857;  THE  NEW  AGENCIES  OF 
TRANSPORTATION  AND  COMMUNICATION 

The  canal. — The  first  of  the  new  transportation  agencies  was  the 
long-awaited  canal,  which  was  opened  for  traffic  in  April,  i848.37  Its  al- 
most immediate  effect  was  to  turn  to  Chicago  the  trade  of  the  Illinois 
River  Valley,  which  had  been  tributary  to  St.  Louis.38  Farmers  along 
the  route  of  the  canal  now  shipped  their  wheat  to  Chicago,  the  canal 
brought  Illinois  coal  to  Chicago  that  enabled  the  iron  industries  to  be- 
come established,  while  the  canal  boats  carried  return  cargoes  of  lumber 
that  increased  from  15,000,000  feet  in  1848  to  39,000,000  feet  in  1850 
and  81,000,000  feet  in  1855,  thus  stimulating  the  lake-borne  lumber 
trade.39  St.  Louis  merchants  found  that  the  all-water  route  by  way  of 
the  Mississippi-Illinois  rivers,  the  Illinois-Michigan  Canal,  the  Great 
Lakes  from  Chicago  to  Buffalo,  the  Erie  Canal,  and  the  Hudson  River 
was  cheaper  and  quicker  than  the  route  by  way  of  the  Ohio  River,  the 
total  freight  on  a  barrel  of  flour  by  the  Chicago  route  to  New  York 
being  $1.48  and  the  time  in  transit  from  twelve  to  twenty  days  as 
compared  with  thirty  to  forty  days  on  the  Ohio  River  route.40  A  canal 
steamboat  with  room  for  thirty-five  cabin  passengers  and  capable  of  a 
speed  of  six  miles  an  hour  began  to  operate  on  the  canal  in  i85o,41  and 
this  service  was  extensively  used  by  emigrants  going  westward  through 
Chicago  to  reach  the  steamers  on  the  Illinois  and  Mississippi  rivers. 

The  telegraph. — On  January  15,  1848,  Speed  and  Cornell's  telegraph 
line  was  completed  from  Chicago  to  Milwaukee.  Shortly  afterward 
O'Reilly's  line  was  opened  to  St.  Louis,  thereby  giving  Chicago  tele- 
graphic communication  with  New  York  and  New  Orleans  also.  In  1850 
Snow's  line  from  Laporte  to  Chicago  gave  wire  connections  with  De- 
troit, Toledo,  and  all  of  Canada.  By  1851  the  corner  of  Clark  and 
Lake  streets  was  the  center  of  four  intersecting  telegraph  lines  which 
put  wheat-buyers  and  wheat-sellers  in  quick  touch  with  world-markets 
and  facilitated  the  rise  of  Chicago  as  a  center  of  financial  control. 

The  plank  roads. — The  southwestern  plank  road  was  started  on  Og- 
den  Avenue  in  1848  and  was  completed  to  Lyons  by  March,  1849; tne 

37  Goodspeed  and  Healy,  op.  cit.,  I,  187. 

38  J.  W.  Putnam,  op.  cit.,  p.  102. 

39  Ibid.,  p.  102;  Hunt's  Merchants'  Magazine,  XXXIX  (1858),  428. 

40  History  of  the  Board  of  Trade,  I,  148. 

41  Goodspeed  and  Healy,  op.  cit.,  I,  209. 


54  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

northwestern  plank  road  on  what  is  now  Milwaukee  Avenue  was 
started  in  1848  and  was  finished  to  Desplaines  in  1849;  and  plank  roads 
in  the  city  on  Madison  and  State  streets,  started  in  1848,  were  heavily 
used  by  the  wagon  caravans  bringing  wheat  to  the  city  before  the  ad- 
vent of  the  railroads.  The  tolls  of  the  two  former  roads  yielded  10-15 
per  cent  dividends  to  the  private  companies  that  constructed  them. 
Within  the  city,  omnibus  lines  were  quick  to  take  advantage  of  the 
plank  roads  on  State  and  Madison  streets,  and  Peck's  line,  which  oper- 
ated from  the  Lake  Street  bridge  to  State  Street  and  down  State  to 
Twelfth  Street  in  1852,  and  the  line  on  Madison  Street  from  State  to 
Ashland  Avenue  were  the  forerunners  of  horse-car  lines  which  later 
followed  these  routes. 

The  railroads. — The  chief  ultimate  importance  of  the  canal,  the  lake 
traffic,  and  the  plank  roads  was  that  they  gave  Chicago  sufficient  ad- 
vantages to  attract  the  railroads,  whose  importance  in  making  Chicago 
a  great  wholesale  and  manufacturing  center  and  in  causing  a  tremen- 
dous rise  in  its  land  values  far  transcended  any  other  single  factor.42 
The  railroads  finally  became  an  interlocking  network  of  lines  covering 
the  entire  United  States,  but  in  the  beginning  they  were  conceived  of  as 
merely  connecting  links  between  waterways,  and  hence  a  city  with  a 
large  existing  canal  and  lake  commerce  provided  a  magnet  that  was 
sure  to  draw  them  to  it.  Chicago  did  not  play  a  prominent  role,  how- 
ever, in  the  calculations  of  the  first  railway  promoters,  probably  be- 
cause its  lake  and  canal  commerce  had  not  been  sufficiently  developed. 
Thus  the  first  plan  for  the  Illinois  Central  in  1836  and  1837  was  for  a 
route  between  Galena  on  the  Mississippi  River,  LaSalle,  the  terminus 
of  the  Illinois-Michigan  Canal,  and  Cairo  on  the  Ohio  River;  the  orig- 
inal line  of  the  Rock  Island  Railroad  was  to  be  from  the  Illinois-Michi- 
gan Canal  to  the  Mississippi  River  at  Rock  Island;  the  Michigan  Cen- 
tral as  first  projected  was  to  run  from  Detroit  to  St.  Joseph  on  Lake 
Michigan;  and  the  Galena  and  Chicago  Union  was  to  connect  Lake 
Michigan  with  the  lead  mines  of  Galena.  Each  state  was  planning  its 
own  railroad  system  with  little  regard  for  its  junction  with  the  railroad 
systems  of  other  states,  and  hundreds  of  private  companies  were  plan- 
ning small  lines  between  neighboring  towns.  In  this  welter  of  projects 

<3  "The  city  of  Chicago  has  built  herself  up,  doubled  her  trade,  trebled  the  value  of  her 
real  estate  and  rendered  it  saleable  by  a  single  act  of  policy — that  of  making  herself  a  rail- 
road center"  (Detroit  Advertiser,  June,  1853;  quoted  in  Goodspeed  and  Healy,  op.  cit.,  I, 
243-44)- 


THE  RAILROAD  ERA  55 

and  of  conflicting  local  systems,  there  was  at  first  no  conception  of  a 
great  western  railroad  system  with  its  center  at  Chicago,  and  many 
localities  would  have  combined  to  fight  such  a  project  had  it  been 
definitely  formulated.  The  influence  of  astute  eastern  capitalists,  how- 
ever, who  foresaw  the  possibilities  of  Chicago  in  1851,  compelled  the 
Rock  Island  to  make  Chicago  its  terminus;  the  branch  line  of  the  Illi- 
nois Central  to  Chicago  soon  became  the  most  important  part  of  its  sys- 
tem, and  other  local  lines  which  started  from  Chicago,  like  the  Galena, 
in  the  end  became  national  systems.  What  had  not  even  been  dreamed 
of  before  1848  had  become  an  accomplished  fact  six  years  later.  Chica- 
go, without  a  single  mile  of  railroad  in  January,  1848,  was  the  railroad 
center  of  the  West  in  1854. 

The  first  railroad  at  Chicago  was  the  Galena  and  Chicago  Union, 
which,  starting  in  1848  with  a  secondhand  locomotive  and  six  old 
freight  cars,  began  to  operate  on  its  ten-mile  line  to  the  Desplaines 
River.  Originally  it  was  compelled  to  stop  at  the  city  limits  at  Halsted 
and  Kinzie,  on  account  of  the  fears  of  the  retail  merchants,  who  saw  in 
it  a  menace  to  the  wagon  trade.  Financed  by  subscriptions  from  the 
"butter-and-egg  money"  of  farmers'  wives  as  well  as  by  eastern  cap- 
italists, it  pushed  westward  to  Elgin  by  1850  and  to  Freeport  by  August 
of  1853,  from  whence  it  proceeded  to  Galena  and  Dubuque,  Iowa,  over 
the  recently  completed  line  of  the  Illinois  Central.  Into  this  main  line 
other  streams  of  traffic  poured  at  Geneva  Junction :  first,  the  trade  of  the 
Fox  River  Valley  coming  from  the  north  over  the  Fox  Valley  Railroad; 
second,  that  of  a  branch  of  the  Galena  running  directly  west  to  Fulton, 
Iowa,  on  the  Mississippi  River;  and,  third,  the  traffic  of  the  Chicago, 
Burlington  and  Quincy  Railroad,  which  was  itself  a  consolidation  of 
several  lines  built  from  Aurora  to  Burlington,  Iowa,  and  which  entered 
Chicago  from  Geneva  over  the  tracks  of  the  Galena.  A  success  from  the 
very  start,  the  wheat  receipts  of  the  Galena  Railroad  increased  to 
505,000  bushels  in  1852  and  4,500,000  bushels  in  1855,  and  in  the  same 
years  it  shipped  out  respectively  47,500,000  and  111,000,000  board  feet 
of  lumber.43  Of  great  importance  to  the  growth  of  the  West  Side  be- 
cause of  the  volume  of  its  traffic,  this  railroad  not  only  extended  its 
main  line  to  Kinzie  and  the  Chicago  River  inside  the  city  limits,  but  in 

«  "The  success  of  the  Galena  and  Chicago  Union  Railroad  is  the  parent  of  all  subse- 
quent railroad  movements  in  this  state.  Had  that  enterprise  failed,  Chicago  would  not  now 
count  half  of  its  present  population"  (Chicago  Magazine,  1857,  cited  in  "Fergus  Historical 
Series,"  No.  5,  Part  II,  p.  16). 


56  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

order  to  secure  a  still  better  access  to  the  lake  commerce  it  bought  land 
along  the  north  bank  of  the  main  channel  of  the  Chicago  River  as  far 
east  as  State  Street  in  1851,  and  built  a  passenger  depot  at  Wells  and 
Kinzie  streets  at  the  same  time. 

In  the  meantime,  the  Illinois  Central  Railroad,  conceived  as  part  of 
the  state's  great  internal  improvement  program  of  1837,  nad  finally  in 
1850  secured  a  land  grant  of  2,500,000  acres  from  Congress.  In  1851  it 
had  become  incorporated  and  with  the  aid  of  large  loans  from  abroad 
had  completed  by  1852  a  line  from  Mattoon,  Illinois,  to  Kensington 
(One  Hundred  and  Fifteenth  Street).  During  the  early  part  of  1852 
this  railroad  had  been  constructing  a  line  along  the  lake  front  to  Roose- 
velt Road.  From  there  it  was  enabled  in  1853  by  an  ordinance  of  the 
city  council  to  proceed  on  piles  driven  in  the  shallow  waters  of  the  lake 
to  its  terminal  at  Lake  Street,  east  of  Michigan  Avenue.  By  1855  the 
entire  system  of  700  miles  in  Illinois  had  been  completed  at  a  cost  of 
$40,000,000,  and  it  was  then  the  largest  railroad  system  in  the  world. 
Its  effect  on  the  development  of  the  southern  suburban  area  of  Chicago 
was  almost  immediate,  for  in  1856  it  began  to  operate  suburban  trains 
to  Hyde  Park  and  by  1857  it  was  running  six  trains  a  day  in  this  service. 
The  Rock  Island,  with  its  depot  at  Sherman  and  Jackson  streets, 
started  from  Chicago  in  1852  and  was  completed  to  Joliet  by  October 
of  the  same  year.  By  1854  it  was  completed  to  Rock  Island  and  the 
next  year  crossed  the  Mississippi  River  over  a  new  bridge  into  Iowa. 
Despite  all  the  efforts  of  the  steamboat  interests  and  the  merchants  of 
St.  Louis  and  New  Orleans  to  close  the  bridge  as  a  menace  to  naviga- 
tion, the  railroad  successfully  diverted  most  of  the  Iowa  trade  along  its 
route  from  St.  Louis  to  Chicago.  Its  immediate  local  effect  was  also 
important,  not  merely  on  the  land  near  its  depot,  but  also  on  the  land 
near  Roosevelt  Road  where  it  established  carshops  and  a  grain  elevator 
and  upon  the  suburban  land  all  along  its  route  from  Roosevelt  Road  to 
Englewood  and  Washington  Heights. 

The  eastern  railroads,  the  Michigan  Central  and  the  Michigan 
Southern,  the  former  entering  the  city  over  the  tracks  of  the  Illinois 
Central  and  the  latter  over  those  of  the  Rock  Island,  both  reached  the 
city  from  the  East  in  1852.  These  new  lines  proceeded  to  pour  into  the 
city  a  great  flood  of  emigrants,  thereby  contributing  greatly  to  increase 
the  permanent  and  transient  population  of  Chicago  in  the  next  few 
years. 


FIG.  9. — Railroads  entering  Chicago  in  1854.    Solid  line  indicates  railroad  lines  actu- 
ally built  in  1854.  Dotted  line  indicates  projected  railroad  lines. 


58  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

In  addition  to  the  railroads  already  enumerated,  which  were  then 
the  most  important,  there  were,  first,  the  Chicago  and  Milwaukee 
Railroad  of  81  miles,  built  along  the  north  shore  to  Milwaukee  in  1854; 
second,  the  Chicago,  St.  Paul  and  Fond  du  Lac,  which  was  constructed 
through  Jefferson  and  Norwood  Park  northwest  from  the  city  in  1854, 
started  suburban  villages  there,  and  was  later  to  become  the  basis  of  the 
Chicago  and  Northwestern  Road;  third,  the  Chicago  and  Alton,  which 
had  reached  Joliet  from  Alton  and  Springfield  by  1854,  but  which  did 
not  enter  Chicago  by  its  route  along  the  Illinois  and  Michigan  Canal 
until  1857;  and,  fourth,  the  Pittsburgh,  Fort  Wayne,  and  Chicago, 
which  formed  a  direct  line  between  Chicago  and  Pittsburgh  by  1859. 
These  four  latter  railroads  entered  a  union  depot  on  Canal  Street  near 
Madison  which  was  finished  in  1860. 

Thus,  after  a  period  of  intense  railroad  activity,  particularly  from 
1852  to  i854,44  Chicago  by  1856  was  the  focus  of  ten  trunk  lines  with 
2,933  miles  of  track  leading  to  all  parts  of  the  country  and  it  had  fifty- 
eight  passenger  and  thirty-eight  freight  trains  arriving  and  departing 
daily.  The  total  earnings  of  the  lines  entering  Chicago  had  increased 
from  $174,000  in  1851  to  $10,652,000  in  1855  and  $18,590,520  in  i857.4S 
One  hundred  and  twenty  trains  entered  the  city  daily  in  1857. 

Grain  and  lumber  trade. — The  new  railroads  and  the  canal  co-oper- 
ated with  the  lake  vessels  to  the  benefit  of  all  three  agencies.  The  two 
former  brought  in  the  wheat  for  the  lake  boats  to  carry  eastward,  and 
these  ships  in  turn  brought  back  lumber  for  the  railroads  and  the  canal 
to  distribute  into  the  interior  western  sections  that  had  already  ex- 
hausted their  easily  accessible  local  timber  supplies.  Chicago  lumber 
receipts,  which  had  been  estimated  at  12,000,000  board  feet  in  1843  and 
which  were  32,000,000  feet  in  1847,  increased  rapidly  to  60,000,000 
board  feet  in  1848,  100,000,000  board  feet  in  1850,  200,000,000  board 
feet  in  1853,  and  457,000,000  board  feet  in  1856,  while  total  shipments 
of  grain  from  Chicago  rose  from  less  than  2,000,000  bushels  in  1850  to 
13,000,000  bushels  in  1854  and  nearly  22,000,000  bushels  in  1856. 46 
Meanwhile,  the  arrivals  and  departures  of  lake  vessels  had  increased 
from  459,910  tons  in  1844  to  1,098,644  tons  in  1854  and  1,608,645  tons 
in  1856.  By  1854  Chicago,  by  virtue  of  its  location  and  transportation 

*  1,621  miles  in  1854  (Goodspeed  and  Healy,  op.  cit.,  I,  253). 

«  Hunt's  Merchants'  Magazine,  XXXVIII  (1858),  756;  ibid.,  XXXIX  (1858),  424. 

*6  Chamberlin,  Chicago  and  Its  Suburbs  (Chicago,  1874),  pp.  282,  285. 


THE  RAILROAD  ERA  59 

advantages,  had  become  the  leading  primary  grain  and  lumber  market 
of  the  world. 

Infant  industries. — The  teamwork  between  lake  commerce,  canal, 
and  railroads  further  developed  a  great  wholesale  trade  in  groceries, 
shoes,  clothing  and  hardware,  and  generated  a  new  manufacturing  in- 
dustry. The  eastern  railroads  brought  in  a  large  supply  of  skilled  and 
unskilled  labor;  the  western  railroads  widened  the  market  for  the 
wagons  and  agricultural  implements  that  were  already  being  produced, 
and  they  themselves  created  a  new  demand  for  car-repair  and  car- 
building  shops,  boiler  works,  iron-rail  mills,  and  bridge-building  plants. 
The  lake  vessels  brought  iron  from  as  far  away  as  Scotland,  and  lumber 
for  wagons,  agricultural  implements,  and  railroad  cars.  The  canal 
shipped  in  Illinois  coal  for  the  budding  iron  industry.  The  close  com- 
munity between  the  lake,  canal,  and  railroads,  with  the  Chicago  River 
and  its  branches  serving  as  a  connecting  link  between  them  all,  was  re- 
vealed by  the  tenacity  with  which  the  railroad  lines  clung  to  the  Chica- 
go River  where  lake  and  canal  commerce  met,  and  by  the  tendency  of 
the  first  manufacturing  plants  to  locate  near  the  river  and  the  railroad 
terminals.  Manufacturing  was  in  its  infancy,  but  the  foundation  of  the 
later  enormous  increase  in  volume  was  being  laid.  The  growth  in  the 
number  of  workers  employed  in  manufacturing  from  2,081  in  i85o47  to 
10,573  i*1  i856,48  and  in  the  value  of  manufactured  products  from 
$2,562,583^  to  $i5,5i3,o63,49is  significant  not  for  the  absolute  amounts, 
but  for  its  indication  of  future  growth.  The  pattern  was  being  formed 
and  the  connections  being  established  in  this  period  for  the  industrial 
factor  that  was  to  be  the  overshadowing  influence  in  the  next  few 
decades. 

The  new  banks. — The  new  organization  of  transportation,  wholesale 
trade,  and  manufacturing  urgently  called  for  a  new  financial  system. 
For  nearly  a  decade  Illinois  had  had  no  regular  banks,  and  the  need  for 
currency  had  been  supplied  by  George  Smith's  admirable  money, 
which  was  always  promptly  redeemed,  other  private  issues,  and  the 
notes  of  distant  banks  in  other  states.  In  1851  a  new  banking  law  was 
passed  authorizing  the  organization  of  banks  in  Illinois  which  were  al- 
lowed to  issue  their  notes  against  bonds  deposited  with  the  state  audi- 

47  U.S.  Census  (1950) — figures  for  all  of  Cook  County. 

48  Local  estimate  of  Chicago  Daily  Democrat,  January  i,  1857. 
4'  Ibid. 


60  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

tor.  A  feature  of  this  law,  which  later  became  of  great  significance,  was 
the  requirement  allowing  notes  to  be  issued  to  the  full  amount  of  the 
bonds  only  in  the  case  of  those  obligations  that  regularly  paid  6  per  cent 
interest  per  annum.  This  induced  the  banks  to  invest  largely  in  the 
bonds  of  the  southern  states,  whose  6  per  cent  bonds  were  not  above 
par.  The  effect  of  this  new  law,  under  which  nine  banks  were  organized 
in  Chicago  by  January,  1854,  was  greatly  to  increase  the  ease  of  bor- 
rowing money  and,  beginning  in  1852,  this  was  a  pronounced  factor  in 
real  estate  speculation.  By  1856  the  circulation  of  all  the  state  banks  in 
Illinois  had  risen  to  over  twelve  million  dollars,  and  while  practically  no 
specie  reserve  was  maintained  to  redeem  the  notes,  on  forced  liquida- 
tion the  bonds  securing  the  notes  had  in  every  instance  before  1860  ex- 
cept one  been  sold  for  enough  to  pay  the  notes  in  full.  A  further  impor- 
tant step  in  market  organization  was  the  formation  of  the  Board  of 
Trade  in  1848,  which  was  later  to  have  a  decisive  role  in  determining 
the  location  of  the  financial  center.  At  this  time  the  financial  center 
was  on  Clark  Street  near  Lake,  where  the  new  banks,  the  old  financial 
houses,  and  insurance  companies  were  mainly  located,  and  where  the 
telegraph  lines  had  their  center. 

The  new  wholesale  trade. — The  opening  of  the  Illinois  and  Michigan 
Canal  caused  a  revolutionary  change  in  the  character  of  Chicago  trade 
with  the  farmers.  Before  that  event  it  had  been  mainly  retail.  There- 
after it  became  chiefly  wholesale.  The  manner  in  which  this  transfor- 
mation occurred  is  thus  described: 

When  the  canal  was  opened  all  of  a  sudden,  these  farmer  wagons  disappeared 
and  our  merchants  were  greatly  astonished  and  nearly  panic-stricken  at  the  wonder- 
ful change.  The  farmers  could  get  for  their  farm  products  at  the  towns  on  the  canal 
from  30  to  80  miles  from  Chicago  within  a  cent  or  two  as  much  per  bushel  [for  their 
wheat]  as  in  Chicago. 

Enterprising  grain  and  provision  merchants  had  pushed  out  to  take  the  farm 
products  at  canal  towns,  and  the  merchants  sent  their  goods  out  to  meet  the  de- 
mands of  the  farmer  retail  trade.  Thus  the  wholesale  trade  of  the  city  was  in- 
augurated. The  rapid  increase  in  the  population  of  Chicago  and  the  advantages  of 
the  wholesale  trade  soon  re-established  the  business  and  confidence  of  the  mer- 
chants.*0 

The  physical  growth  of  Chicago,  1848-57.— After  thus  briefly  describ- 
ing the  forces  of  transportation  that  converged  upon  Chicago  and  made 
it  in  time  one  of  the  world's  greatest  crossroads  of  commerce,  it  is  neces- 

s°  J.  W.  Waughop  in  Chicago  Tribune,  September  28,  1884. 


THE  RAILROAD  ERA  61 

sary  before  discussing  the  decisive  influence  of  these  forces  upon  the 
sensational  rise  of  Chicago  land  values  to  describe  the  internal  growth 
of  Chicago  during  these  eventful  formative  years  when  its  future  char- 
acter was  being  decided. 

While  the  population  of  Chicago  almost  doubled  from  1847  to  1848, 
increasing  from  10,859  to  20,023,  the  young  city  contained,  in  addition, 
a  large  transient  population  which  was  constantly  passing  through  it 
and  causing  an  expansion  of  its  hotels,  saloons,  and  retail  stores  far  be- 
yond the  needs  of  its  permanent  residents.  To  the  farmers  in  their 
prairie  schooners,  the  sailors  from  the  lake  vessels,  and  the  emigrants  on 
their  way  to  western  farms  was  now  added  the  throng  of  "forty-niners" 
bound  for  the  gold  fields  of  California.  The  time  from  New  York  to 
Chicago  had  been  reduced  from  the  thirty  days  of  1836  to  seven  days  in 
1849,  as  a  result  of  the  completion  of  a  railroad  line  from  the  East  to 
New  Buffalo,  Michigan,  on  the  opposite  side  of  the  lake.  Travelers  took 
a  steamer  at  New  Buffalo  for  Chicago,  and  at  Chicago  many  of  them 
took  packet  boats  on  the  canal  for  LaSalle,  where  they  transferred  to 
Mississippi  River  steamboats.  The  streets  of  Chicago  were  thus  places 
of  restless  activity  even  in  1849  before  the  main  development  of  the 
railroads.  The  forces  of  the  new  industrialism,  then  novel  and  strange, 
thrilled  the  local  newspaper  writers,  and  they  were  fascinated  by  the 
power  of  steam  and  the  flow  of  goods  and  people  that  had  been  rapidly 
set  in  motion  in  this  quiet  country  town. 

Our  streets  present  an  animated  picture.  Thronged  with  laden  wagons,  filled 
with  busy  people,  vocal  with  the  rattling  of  wheels,  the  rush  of  steam,  the  clank  of 
machinery  and  many  voices,  goods  gaily  flaunting  from  awning  posts  and  store 
doors,  docks  piled  with  boxes,  bales  and  bundles  of  merchandise,  warehouses  like 
so  many  heart  ventricles  receiving  the  grain  on  one  side,  and  with  a  single  pulsation, 
pouring  it  out  on  the  other  into  waiting  vessels  and  steamers  to  be  borne  away  on 
the  general  circulation,  lumber  yards  heaped  with  the  products  of  the  forest,  fur- 
naces and  machine  shops  sending  out  the  exponents  of  industry  and  skill,  here  a 
drove  of  horses,  there  a  herd  of  cattle,  those  for  the  Chicago  Tattersalls,  these  for 
the  shambles  and  the  packer — the  multitude  of  strangers  whose  arrival  every  pack- 
et bugle  and  locomotive  whistle  and  steamer's  bell  heralds,  all  these  and  more  are 
now  pictured  upon  every  observer's  eye  and  swell  the  diapason  of  busy  life  to  every 
listening  ear.  How  different  from  the  listlessness  and  languor  which  pervaded  the 
city  but  two  months  ago.51 

Even  this  tempo  was  speeded  up  in  1852  when  direct  rail  communica- 
tion was  opened  between  Chicago  and  New  York  and  the  time  required 

s1  Chicago  Daily  Journal,  October  18,  1849. 


62  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

for  the  trip  was  reduced  from  seven  days  to  thirty-six  hours.  The  Irish 
fleeing  from  the  country  stricken  by  famine  in  1845  and  1846  and  the 
Germans  emigrating  from  their  homeland  because  of  agricultural  de- 
pression and  the  failure  of  the  liberal  movement  in  1848  could  come 
directly  from  New  York,  the  main  port  of  entry,  into  the  heart  of 
America.  From  1852  to  1853  the  population  of  Chicago  increased  from 
38,754  to  60,666  and  half  the  population  in  the  latter  year  was  foreign 
born.  Most  of  this  increased  population  was  poured  into  the  city  by 
the  railroads.  Four  trains  on  the  Michigan  Central  Railroad  brought  in 
two  thousand  passengers  from  the  East  in  one  day  in  1854.  In  the  five 
years  ending  February,  1857,  all  of  the  railroads  entering  or  leaving 
Chicago  carried  three  million  passengers.  Chicago,  however,  according 
to  one  observer,  still  presented  an  unprepossessing  appearance  even  in 
1853- 

At  that  time  [October  6,  1853]  Chicago  was  called  a  city,  it  is  true,  but  it  was  a 
rude,  cheaply  built  and  dirty  Western  town.  On  the  South  Side  there  was  beyond 
Twelfth  Street  nothing  to  speak  of  but  one  large  frame  house  known  as  the  Clarke 
House,  and  the  depot  of  the  Michigan  Southern  Railroad  on  Clark  Street.  West 
of  this  street  there  was  a  broad  space  of  vacant  lands  on  the  north  and  west  sides, 
though  there  were  scattered  wooden  residences  as  far  west  as  Bull's  Head  Tavern 
in  the  neighborhood  of  Union  Park.  In  the  center  of  the  city  there  were  some  cheap 
wooden  buildings,  some  on  South  Water  and  Lake  Streets.  A  few  brick  stores  stood 
on  Clark  and  Dearborn  Streets  north  of  Randolph.  South  of  Randolph  on  the 
same  streets,  wooden  dwellings,  houses  with  now  and  then  an  unpretentious  church 
edifice  extended  southward  to  i2th  Street.  The  streets  of  Chicago  were  at  that 
time  execrable,  being  unpaved,  but  in  the  older  parts  of  the  city  covered  with 
planks,  beneath  which  lay  an  untold  depth  of  black  mud,  jets  of  which  were  thrown 
up  as  wagons  passed.52 

As  a  result  of  the  heavy  volume  of  European  immigrants  and  home- 
seekers  from  the  East  coming  West  on  the  railroads  to  Chicago,  the  city 
grew  rapidly  in  population  to  80,000  in  1855,  a  seven-fold  increase  in 
the  decade  since  i845.53  The  hotels  were  overcrowded,  and  notwith- 
standing the  rapid  rate  of  building  it  was  said  in  1854  that  there  was 
not  a  house  to  let  in  the  city.  The  increased  tempo  of  activity  in  1854  is 
thus  described: 

Never  in  the  history  of  Chicago  have  the  streets  of  our  city  given  so  clear  evi- 
dence of  intense  activity  as  for  the  past  few  weeks.  Carriages,  drays,  vehicles  of  all 

s3  Address  of  Judge  John  Alexander  Jameson,  "In  Memoriam,"  Annals  of  the  American 
Academy  of  Political  Social  Science  (1890). 
53  Chamberlin,  op.  cit.,  p.  279. 


THE  RAILROAD  ERA  63 

descriptions  fill  the  streets,  the  sidewalks  are  literally  crowded  with  people  in  a 
hurry,  rushing  in  all  directions.  The  hotels  are  crowded  to  overflowing  and  those 
who  arrive  by  the  evening  trains  are  fortunate  if  they  find  a  place  to  lie  down  on  the 
parlor  floor  until  morning^ 

This  flow  of  traffic  reached  a  maximum  at  the  Clark  Street  bridge, 
where  in  one  day  in  1854  from  6 :  oo  A.M  to  7 :  oo  P.M.  24,000  persons  and 
6,000  teams  crossed  in  both  directions,  and  where  from  November  13  to 
15,  1855,  an  average  of  27,750  persons  and  4,909  teams  crossed  it  daily. 
Next  in  importance  was  the  Randolph  Street  bridge  from  the  West  Side 
with  an  average  daily  traffic  count  of  12,660  persons  and  2,845  teams  in 
1855.  The  Lake,  Wells,  Madison,  and  Kinzie  Street  bridges  carried  re- 
spectively 9,426,  8,836,  7,946,  and  6,546  persons  daily  and  6,587, 1,790, 
2,010,  and  263  teams  daily  at  the  same  time.  Thus  there  was  a  total  of 
73,164  persons  and  18,404  teams  daily  on  all  bridges.55  The  incoming 
passengers  on  the  Michigan  Central  arrived  at  the  depot  of  the  Illinois 
Central  at  Lake  Street  east  of  Michigan  Avenue;  those  from  the  East 
coming  on  the  Michigan  Southern  poured  in  at  the  station  at  Van 
Buren  and  Sherman  streets,  while  western-bound  emigrants  left  at 
these  depots  or  at  the  Wells  and  Kinzie  Street  depot  of  the  Galena  or 
the  union  depot  on  the  West  Side. 

New  buildings  and  public  improvements. — Under  the  stimulus  of  in- 
creased demand  for  housing  and  rising  rents,  the  number  of  buildings  in 
the  city  increased  from  1,364.111 1842  to  5, 798  in  1851  and  9,212  in  i853.s6 
In  1854  new  buildings  and  public  improvements  to  a  value  of  $2,438,910 
were  added,  and  in  the  next  three  years  the  amounts  were  respectively 
$3>735>°°°>  $5>7°8>624>  and  $6,423,518,  making  a  total  outlay  of 
$18,305,000  for  new  buildings  and  public  improvements  for  the  four 
years  1854-57  inclusive.57  These  buildings  included  not  merely  thou- 
sands of  small  frame  cottages  but  also  four-  and  five-story  brick  build- 
ings on  Lake  and  Randolph  streets.58 

54  Daily  Democratic  Press,  November,  1854. 

55  Ibid.,  December  22,  1855.  In  1871,  200,000  a  day  crossed  27  bridges. 

56  Goodspeed  and  Healy,  op.  cit.,  I,  223,  250.  Then  in  1851  the  number  of  buildings — 
1,506  on  West  Side,  2,742  on  South  Side,  and  1,550  on  North  Side.  There  were  7,627  dwell- 
ings in  1853. 

57  Moses  and  Kirkland,  op.  cit.,  I,  124. 

sg  "A  large  proportion  of  the  buildings  are  of  brick.  Iron  has  become  an  article  almost 
indispensable  to  the  builder.  A  larger  quantity  of  stone  has  been  used  during  the  past  than 
during  former  years.  In  finish  and  design,  especially  of  stores,  a  greater  degree  of  attention 
has  been  paid  to  taste  and  style"  (Democrat,  January  5,  6,  1852). 


64  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

The  city  was  also  undergoing  a  great  transformation  in  regard  to  its 
public  improvements  with  the  introduction  of  plank  roads,  sidewalks, 
gas  lights,  sewers,  and  new  bridges.  Lake  Street  was  planked  as  early 
as  1844;  in  1849  nearly  3  miles  of  planking  were  laid,  and  in  1850  6.69 
miles  of  plank  roads  were  constructed  in  the  city,  of  which  12,667  ^eet 
were  on  State  Street,  7,481  feet  on  West  Madison  Street,  4,921  feet  on 
Market  Street,  4,329  feet  on  North  Clark  Street,  and  a  total  of  2,930 
feet  on  South  Clark,  LaSalle,  Wells,  East  Madison,  and  West  Randolph 
streets.59  These  plank  roads  contributed  greatly  to  the  rise  of  land 
values  on  State,  Madison,  and  North  Clark  streets,  since,  as  they  were 
planked  for  considerable  distances,  they  attracted  the  omnibus  lines. 
By  1856  there  were  eighteen  of  these  lines  making  408  trips  daily.60 
Gas  lights  were  first  introduced  in  September,  1850.  By  1855  there 
were  2,000  consumers  and  by  1856  there  were  456  public  lamps.61  The 
first  sewers  were  constructed  in  1851  when  2,987  feet  were  laid  down, 
and  by  1856  there  were  6  miles  of  sewers  in  Chicago,  those  east  of 
State  emptying  into  Lake  Michigan  and  those  west  of  it  into  the  river.62 
By  1854,  159  miles  of  plank  sidewalks  had  been  constructed.63  A  new 
water  company  was  organized  in  1851 ;  by  1853  it  had  completed  a  crib 
600  feet  from  the  shore  and  by  1857  it  was  supplying  7,053  buildings 
with  water.64  Twenty-seven  miles  of  plank  road  had  been  laid  by  1854, 
but  these  soon  fell  into  bad  repair,  and  new  pavements  of  macadam, 
cobblestones,  and  finally  of  wooden  blocks  were  tried,  the  latter  type 
being  used  on  Wells  and  Washington  streets  in  1856  and  i857.6s  Final- 
ly, after  widening  and  deepening  the  main  channel  of  the  river  in  1855 
and  1856,  the  city,  to  provide  a  better  grade  for  drainage,  raised  the 
level  of  the  downtown  area  from  4  to  6  feet  during  the  years  from  1856 
to  i86o.66  A  new  iron  bridge  was  constructed  over  the  main  channel  at 
Rush  Street  to  connect  the  Illinois  Central  and  Galena  depots  in  1856, 
and  new  bridges  were  built  in  1857  over  the  south  branch  at  Polk  and 
over  the  north  branch  at  Erie  and  Indiana  (or  Grand)  streets.67 

59  Chicago  Daily  Journal,  January  4,  1851;  Goodspeed  and  Healy,  op.  cit.,  I,  219. 

60  Moses  and  Kirkland,  op.  cit.,  I,  127. 

61  Ibid.,  p.  124.  6a  Andreas,  op.  cit.,  I,  191. 
63  Moses  and  Kirkland,  op.  cit.,  I,  126. 

^Ibid.,  p.  125.  <xlbid.,  p.  126. 

66  Ibid.,  p.  125.  The  level  was  raised  10-15  feet  altogether,  but  at  this  time  the  level 
was  raised  from  4  to  6  feet. 

6?  Andreas,  op.  cit.,  II,  60;  ibid.,  I,  202. 


THE  RAILROAD  ERA  65 

Chicago's  expansion. — During  this  period  from  1848  to  1857,  Chicago 
was  building  up  solidly  with  four-  and  five-story  brick  buildings  at  its 
center  on  Lake  Street,  and  building  thousands  of  frame  cottages  on  the 
near  South,  North,  and  West  sides.  Lake  Street,  the  main  retail  street, 
had  by  1856  not  a  vacant  lot  from  the  river  on  the  west  to  the  depot 
east  of  Michigan  Avenue.  South  Water  Street  was  rejuvenated  from  a 
street  of  tumble-down  shanties  into  the  leading  wholesale  street.  The 
expansion  of  business  down  State,  Clark,  and  Dearborn  streets  had 
reached  and  passed  Washington  Street,  whose  churches  were  beginning 
to  move  over  to  Wabash  Avenue.  Fashionable  homes  were  being 
erected  on  Michigan  and  Wabash  avenues  south  of  Van  Buren  and 
Congress  streets  by  1854.  Hotels  were  springing  up  around  the  railroad 
depots  near  Michigan  and  Lake  streets,  near  Van  Buren  and  Sherman 
and  on  North  Clark  streets.  Wagon  factories  were  located  along  Ran- 
dolph Street  just  east  and  west  of  the  south  branch,  and  on  Franklin 
and  Market  streets;  iron  foundries  and  planing  mills  found  sites  on 
Canal  and  Clinton  streets  near  Randolph  and  Washington  streets ;  and 
along  the  north  bank  of  the  river  along  Kinzie  Street  were  several  large 
industries,  including  the  McCormick  reaper  works  near  the  mouth  of 
the  river.  Large  grain  elevators  were  along  the  river  near  the  railway 
terminals  as  far  south  as  Roosevelt  Road;  there  were  a  great  many 
lumber  yards  on  the  west  bank  of  the  south  branch  stretching  as  far 
south  as  Twenty-second  Street.  The  largest  stock  yard  in  1856  was  at 
Bull's  Head  at  Madison  and  Ashland  Avenue,  but  there  were  other  im- 
portant yards  at  Eighteenth  Street  and  the  south  branch,  and  at  Cot- 
tage Grove  and  Twenty-ninth  streets.  The  car-repair  shops  at  the 
Galena  Railroad  at  Kinzie  and  Milwaukee,  of  the  Illinois  Central  south 
of  Roosevelt  Road  near  Michigan  Avenue,  of  the  Rock  Island  near 
Roosevelt  Road  and  State  Street,  and  the  shops  of  the  American  Car 
Company  at  Twenty-sixth  Street  and  the  lake  furnished  employment 
for  many  men  and  gave  rise  to  workingmen's  homes  and  boarding- 
houses  in  their  vicinity.  To  the  slum  areas  along  the  river,  the  Kilgub- 
bin,  with  a  notorious  population  of  two  thousand  in  1858,  to  the 
"Sands"  north  of  the  river  near  Lake  Michigan,  which  was  raided  and 
burned  down  by  Mayor  Wentworth  in  1857,  and  the  sailors'  resorts  on 
Wells  and  the  streets  west  of  Wells  south  of  Washington  were  now 
added  such  new  patches  as  the  forty  or  fifty  acres  of  shanties  on  the 
West  Side  near  Halsted  and  Twenty-second  Street  on  the  south  branch; 


66  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

twenty  acres  of  shacks  near  Halsted,  Desplaines,  and  Harrison;  the 
Milwaukee  and  Union  Avenue  section;  the  slums  on  Clark  and  State 
near  Roosevelt  Road  and  on  North  Rucker  and  Kinzie,68  each  of  which 
settlements  possessed  a  peculiar  jargon  of  its  own.  The  floating  popula- 
tion brought  in  by  the  railroads  contributed  to  the  growth  of  these 
areas,  which  were  often  located  near  railroad  shops  and  yards. 

Of  all  the  sections  of  the  city,  the  West  Side  grew  fastest  in  this 
period  from  1848  to  i85y.69  Although  in  1851  out  of  5,798  buildings  in 
Chicago  only  42  were  west  of  Carpenter's  Addition  (i.e.,  over  one  and  a 
half  miles  west  of  State  and  Madison  streets)  and  only  15  were  west  of 
Duncan's  Addition  (i.e.,  west  of  Roosevelt  Road  and  Halsted),70  by 
December,  1853,  the  population  of  the  west  division  was  14,679  and  by 
August,  1856,  it  had  doubled  in  numbers  with  a  total  of  28,250.  In  the 
meantime,  the  population  of  the  North  Side  increased  from  17,859  to 
25,524  and  that  of  the  South  Side  from  26,592  to  30,339.71  The  plank 
roads,  the  railroads  with  their  terminals  and  carshops,  the  lumber 
yards,  and  thirty  or  forty  small  manufacturing  plants  on  or  near  the 
south  branch  of  the  river  contributed  to  this  growth. 

By  1857  Chicago  had  grown  solidly  on  the  west  as  far  as  half  a  mile 
west  of  Halsted,  as  far  south  as  Roosevelt  Road,  and  as  far  north  as 
Chicago  Avenue.  There  were  also  patches  of  growth  beyond  in  all 
directions.  On  the  West  Side  a  prong  of  growth  extended  along  Madi- 
son to  Ashland  Avenue.  Carville  at  Twenty-sixth  Street  and  Cottage 
Grove  Avenue,  Cleaverville  at  Thirty-ninth  Street  and  the  lake,  and 
Holstein  at  Western  and  Fullerton  avenues  were  the  satellite  industrial 
towns  beyond  the  main  settled  area  of  this  period.  Other  detached  set- 
tlements had  grown  up  at  Clark  and  Division  streets,  Division  and 
Clybourn  streets,  and  at  Irving  Park  and  Clark  streets.  Beyond  all  of 
these  were  the  embryonic  suburban  towns  just  starting  along  the  rail- 
roads at  Hyde  Park,  Fifty- third,  and  the  Illinois  Central;  Englewood, 
Sixty-third  and  the  Rock  Island;  Grand  Crossing;  and  a  few  incipient 
traces  to  the  north  and  west.  The  suburban  movement  had  barely 
started  in  this  period.73  Of  the  112,000  people  living  within  four  miles 

68  Goodspeed  and  Healy,  op.  cit.,  I,  190-91. 

<»  Ibid.,  p.  221.  T°Ibid.,  p.  223. 

**  Moses  and  Kirkland,  op.  cit.,  II,  613. 

v  The  first  settler  came  to  Kenwood  in  1856.  "In  the  fall  of  1856  there  were  not  more 
than  half  a  dozen  houses  in  Hyde  Park"  (Andreas,  op.  cit.,  p.  530).  There  were  only  three 
or  four  shanties  at  Kensington  in  1854  and  only  a  few  settlers  in  Englewood  before  1867. 


THE  RAILROAD  ERA  67 

of  State  and  Madison  in  1860,  79,000,  or  over  70  per  cent,  lived  within 
the  first  two  miles.73 

The  rise  in  land  values,  1848-57. — The  completion  of  the  canal  in 
1848  enabled  the  canal  trustees  to  offer  for  sale  large  tracts  of  canal 
lands  within  two  or  three  miles  of  the  main  business  district  of  Chicago 
in  ten-  and  twenty-acre  blocks.  Then  the  new  boom  began  to  get  under 
way.  Increasing  business  and  rising  rents  in  the  downtown  area  slowly 
raised  values  there,  Lake  Street  west  of  LaSalle  selling  for  $225  a  foot 
in  1848,  and  Madison  near  State  at  $120  a  foot  in  1849.  The  corner  of 
Clark  and  Lake  sold  for  $400  a  foot  in  October,  i852.74  The  rise  in 
values  from  1852  to  1854  was  spectacular,  and  is  but  faintly  indicated 
by  the  increase  in  the  assessed  value  of  real  estate  from  $5,685,965  in 
1850  to  $8,189,069  in  1852,  $13,130,177  in  1853,  and  $21,637,500  in 
1855,  large  as  that  was.75  The  ease  of  borrowing  money  from  the  new 
state  banks  and  sales  on  easy  instalments  encouraged  real  estate  specu- 
lation in  1852,  and  the  great  demand  for  land  for  actual  use  for  railroad 
yards  and  terminals,  for  lumber  yards,  elevator  and  manufacturing 
sites,  and  for  hotels,  stores,  and  homes  for  the  expanding  population 
gave  a  sudden  increase  to  the  value  of  close-in  vacant  land,  while  rising 
rents  and  taller  buildings  created  a  higher  value  for  that  already  in  use. 
While  Lake  Street  attained  an  average  value  of  $1,000  a  front  foot  by 
i856,76  the  best  wholesale  streets,  such  as  South  Water  Street,  reached 
$500  a  foot,  the  best  residence  sites  on  Michigan  and  Wabash  near  Van 
Buren  $300,"  and  with  corners  as  high  as  $400  a  foot;78  lots  along  the 
river  as  far  south  as  Eighteenth  and  as  far  north  as  North  reached  $100 
a  foot,  and  other  land  as  far  south  as  Roosevelt  Road  and  as  far  north 
as  Chicago  and  as  far  west  as  Halsted  passed  the  $ioo-a-foot  level. 

By  1856  State  and  Clark  streets  near  Monroe  had  sold  for  $250  a 
foot,79  Jackson  and  Sherman  $100  a  foot,  Clark  Street  north  of  Chicago 
$125  a  foot,  LaSalle  near  Oak  $200  a  foot,  Lake  near  Carpenter  $100  a 

73  Report  of  Chicago  Traction  and  Subway  Commission,  1916,  p.  73. 

74  Goodspeed  and  Healy,  op.  cit.t  I,  239. 

75  Chamberlin,  op.  cit.,  p.  201. 

T6  Chicago  Democratic  Press,  February  5,  1857. 

77  Ibid.,  November  12,  1855. 

78  Sale  of  corner  of  Michigan  and  Congress  for  $400  a  front  foot  (ibid.,  April  17,  1856). 

79  The  sale  of  the  southeast  corner  of  State  and  Van  Buren,  160  feet  on  State  by  no  feet 
on  Van  Buren,  for  $32,000  was  reported  in  the  Daily  Democratic  Press  on  December  22, 
1855- 


MAP  OF  CHICAGO 

-SHOWING  - 


ORIGINAL  SUBDIVISIONS 
1844  TO  1862 


LEGEND  FOR  DATA 

AREAS  SUBDIVIDED  BEFORE  1844 
AREAS  SUBDIVIDED  FROM  1844  TO  1847 


AREAS  SUBDIVIDED  FROM  1856  TO  I860 
THERE  WERE  NO  SUBDIVISIONS  IN  1861  AND  1862 


V. 

iillnhii 


FIG.  10 


THE  RAILROAD  ERA  69 

foot,  and  Lake  facing  Union  Park  $100  a  foot.  Land  on  Michigan 
Avenue  between  Monroe  and  Adams  sold  for  $325  a  foot  in  1855. 8o  The 
corner  of  Lake  and  Clark  reached  $1,000  a  foot  before  i856.8z  Residen- 
tial property  north  of  Madison  and  west  of  Halsted  sold  for  $60  and  $70 
a  foot,  but  the  cheaper  property  for  workingmen's  homes  was  sold  for 
$15  to  $20  a  foot  near  Twenty-second  and  State,  Roosevelt  and  Halsted 
and  on  the  North  Side  west  of  Wells  and  south  of  Chicago  Avenue, 
while  more  distant  lots  at  Holstein  at  Fullerton  and  Western,  at  Bridge- 
port, Archer,  and  Ashland,  sold  for  $100  each,  or  $4.00  a  foot. 

The  rapidity  of  the  increase  in  the  value  of  land  within  three  or  four 
miles  from  State  and  Madison  from  1848  to  1856  was  astounding.82 
Land  near  State  and  Roosevelt  Road  that  was  offered  for  $200  an  acre 
in  1845  s°ld  for  from  $50  to  $150  a  foot,83  or  an  average  of  $20,000  an 
acre  in  1856.  South  of  Twenty-second  Street,  east  of  State,  there  were 
such  increases  from  1851  to  1856  as  from  $600  to  $10,000  for  Block  33; 
Twenty-fourth  and  State,84  $620  to  $26,000  for  Block  go;8s  and  at 
Thirty-ninth  and  State  (20  acres),  from  $25  to  $1,000  an  acre  from  1850 
to  i85y.86  West  of  Madison  and  Ashland,  Block  46  in  section  7  in- 
creased in  value  from  $1,250  in  1848  to  $30,000  in  1854,  and  near 
State  and  North  Avenue  the  increase  was  from  $39  to  $1,400  an  acre 
from  1848  to  i856.87  Twelve  acres  at  North,  Dearborn,  and  Clark 
streets  sold  for  $50  an  acre  in  1845,  and  some  lots  in  this  tract  sold 
at  the  rate  of  $50,000  an  acre  in  185 7. 88 

The  land  value  of  the  territory  within  the  present  city  limits  of 
Chicago  had  increased  from  an  estimated  total  of  $1,400,000  in  1842  to 

80  Ibid.,  December  22,  1855. 

81  Chicago  Tribune,  February  13,  1891.  For  land  values  in  the  central  business  district 
in  1856  see  Figs.  71  and  73. 

82  An  indication  of  the  extent  of  the  rise  by  1853  in  the  opinion  of  current  observers  is  this 
statement  in  the  Democratic  Press  of  July  1 1, 1853 :  "Five  years  ago  $3,000  would  have  pur- 
chased more  land  suitable  for  such  purposes  [parks]  than  $500,000  will  now." 

*>  Sale  of  160  by  180  feet  on  State  Street  south  of  Roosevelt  Road  for  $20,000,  or  $125 
a  front  foot,  in  1856  (Chicago  Daily  Journal,  December,  8,  1856).  Sales  on  State,  Wabash, 
and  Michigan  south  of  Roosevelt  Road  at  from  $100  to  $124  a  front  foot  at  auction  (ibid., 
March  26,  1856). 

8-»  Shortall  and  Hoard's  Abstracts,  Vol.  41,  p.  356. 

85  Ibid.,  Vol.  79,  p.  141. 

86  Ibid.,  Vol.  72,  p.  904. 

8?  Chicago  Title  and  Trust  Abstracts,  Vol.  1605,  pp.  627,  630. 
88  Andreas,  op.  cit.,  II,  569,  in  article  on  Ogden,  Sheldon  &  Co. 


70  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

$126,000,000  in  the  latter  part  of  1856,  an  increase  of  over  eighty  fold  in 
fourteen  years,  most  of  the  increase  occurring  in  the  last  five  years. 
The  new  peak  was  twelve  times  as  high  as  the  peak  of  1836,  which  for 
many  years  afterward  had  been  regarded  as  fantastic.  As  the  Chicago 
Daily  Press  and  Tribune  stated  in  January  of  1859:  "The  appreciation 
in  Chicago  real  estate  in  the  last  five  years  has  been  enormous.  Holders 
of  any  considerable  parcels  of  property  in  a  comparatively  short  period 
found  themselves  rich."89 

While  the  land  within  the  first  mile  of  State  and  Madison  increased  in 
value  from  $810,000  in  1842  to  $50,750,000  in  1856,  a  gain  of  over  sixty 
fold,  the  greatest  rate  of  increase  came  in  the  belts  from  one  to  four 
miles  from  State  and  Madison.  The  zone  from  one  to  two  miles  from 
the  center  that  had  been  valued  at  $2,000,000  in  1836  and  $200,000  in 
1842  had  risen  to  a  computed  total  of  $37,000,000,  a  gain  of  185  times 
over  1842  and  of  18  times  over  1836.  The  belt  from  two  to  three  miles 
from  State  and  Madison  had  gained  from  a  computed  total  of  $816,400 
in  1836  and  $80,000  in  1842  to  $18,500,000  in  1856,  a  gain  of  230  times 
over  1842  and  of  22  times  over  1836.  The  zone  from  three  to  four  miles 
from  State  and  Madison,  valued  at  $416,000  in  1836  and  $40,000  in 
1842,  had  risen  to  an  estimated  value  of  $7,000,000  in  1856,  an  increase 
of  175  times  over  1842  and  17  times  over  1836.  The  outer  belt  of  112,- 
ooo  acres  with  an  estimated  value  of  $12.50  an  acre,  or  $1,400,000,  in 
1836  and  $2.50  an  acre,  or  $280,000,  in  1842,  had  increased  in  value  to 
$12,000,000  in  1856,  a  gain  of  43  times  over  1842  and  9  times  over  1836. 
The  land  within  the  first  mile  of  State  and  Madison,  which  comprised 
56  per  cent  of  the  value  of  all  the  land  in  the  present  city  limits  in  1836 
and  in  1842,  comprised  no  more  than  40  per  cent  of  that  total  in  1856. 

The  railroads  had  opened  up  the  possibilities  of  land  from  one  to  four 
miles  from  the  downtown  section,  and  this  area  was  largely  subdivided 
into  lots  in  this  period.90  Twenty-foot  stores  on  Lake  Street  costing 
$10,000  to  build  rented  for  $4,500  a  year,  so  that  a  value  of  $1,000  a 
foot  for  the  ground  was  justified  even  at  the  prevailing  rates  of  10  per 
cent  interest  per  annum.  Land  even  a  mile  away  was  in  demand  for 
purposes  involving  the  actual  use  of  the  ground.  The  fashionable  de- 
mand from  the  newly  risen  crop  of  merchant  "princes"  placed  a  value 
of  $300  to  $400  a  foot  on  the  best  sites  on  Michigan  and  Prairie  avenues 
for  $12,000,  $15,000,  and  $25,000  homes.  The  values  of  other  lands  be- 

8»  January  6,  1859.  90  see  jrjg  9  on  original  subdivisions,  1844-62. 


MAP  OF  CHICAGO 

-SHOWING- 
LAND  VALUES  PER  FRONT  FOOT 
1856 


FRONT  FOOT  VALUES  IN  DOLLARS 

HU  100  AN  DOVER 
50  TO  99 
26  TO  49 
4  TO  25 


BASED  ON  RECORDS  OF  ACTUAL  SALES 


PREPARED  BY  HOMER  HOYT 


FIG.  ii 


MAP  OF  CHICAGO 

-SHOWING- 
LAND  VALUES  -1857 

AVERAGE  VALUES  FOR  EACH  SQUARE  MILE  IN  DOLLARS  PER  ACRE 
SOURCE'  ACTUAL  SALES 


FlG.  12 


MAP  OF  CHICAGO 

-SHOWING- 
LAND  VALUES  -  1856  TO  1857 
INDICATED  BY  SALES  OF  ACRE  TRACTS 


LEGEND 

LOCATION  AND  EXTENT  OF  AREAS  SOLO 
THE  PRICE  IN  DOLLARS  PER  ACRE  IS 
INDICATED  BY  THE  FIGURE  IN  THE  SAME 
SQUARE  MILE  SECTION 


STUCtT 
STKCIT 


FIG.  13 


74  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

yond  the  zone  of  actual  use  were  based  on  the  expectation  of  the  con- 
tinued growth  of  the  city.  The  projection  of  the  trend  of  the  fashion- 
able residential  area  southward  had  caused  the  values  of  lots  at  Twen- 
ty-second and  Prairie  and  Michigan  to  rise  to  $50  and  $60  a  foot  by 
1855,  and  similar  hopes  had  penetrated  the  whole  Chicago  region,  rais- 
ing land  values  to  the  farthest  limits  of  the  Chicago  area.91 

C.    THE  PERIOD  FROM  1857  TO  1862.    THE  PANIC  OF  1857 
AND  THE  CIVIL  WAR 

The  panic  of  1857. — While  the  volume  of  building  in  Chicago,  the 
earnings  of  Chicago  railroads,  and  the  grain  and  lumber  receipts  had  all 
reached  new  peaks  in  1856  and  1857,  the  prices  of  the  main  staple  com- 
modities had  been  falling  from  May,  1855,  to  December,  1856,  wheat 
dropping  from  $2.00  to  $1.00  a  bushel.93  In  the  summer  of  1857  a  finan- 
cial stringency  had  developed  in  New  York  which  was  blamed  by  east- 
ern interests  on  the  overspeculation  in  western  lands  and  too  rapid 
railroad-building.  The  suspension  of  specie  payments  by  New  York 
banks  forced  a  private  bank  in  Chicago  to  close  on  August  11,1857,  and 
with  their  eastern  bills  protested  two  more  private  banks  in  Chicago 
closed  on  September  30,  i857.93  Many  railroads  had  been  built  in  ad- 
vance of  traffic  and  during  October,  1857,  fifteen  railroads  with  obliga- 
tions of  $181,700,000,  including  the  Illinois  Central  with  $24,000,000  in 
debts,  the  Michigan  Southern  with  $18,000,000,  and  the  Michigan 
Central  with  $14,000,000,  were  forced  to  make  assignments  for  the 
benefit  of  creditors.  The  prices  of  railway  shares  broke  sharply  on  the 
New  York  stock  exchange  during  1857,  Galena  stock  falling  from  119 
on  December  15,  1856,  to  54  on  October  12,  1857,  and  during  the  same 
period  New  York  Central  shares  fell  from  93  to  53,  Erie  from  61  to  8, 
and  Michigan  Southern  from  88  to  9.94 

The  depression  in  1858. — The  effect  of  the  panic  of  1857  was  felt  in 
1858  when  the  earnings  of  Chicago  railroads  dropped  from  $16,768,000 
in  1857  to  $13,062,000  in  1858,  lumber  receipts  fell  from  460,000,000  to 
279,000,000  board  feet,  and  the  volume  of  new  buildings  and  public  im- 
provements declined  from  $6,423,518  to  $3,246,400  in  the  same  period.95 
Hundreds  of  unemployed  laborers  in  January,  1858,  offered  to  work  for 

91  See  land-value  maps  for  1856  (Figs.  10,  n,  and  12). 

9*  Democratic  Press,  January  i,  1857.  93  Chicago  Press,  October  i,  1857. 

94  Democratic  Press,  December  15,  1856;  Chicago  Press,  October  19,  1857. 

9*  For  1858  building  volume,  Chicago  Daily  Press  and  Tribune,  January  i,  1859. 


THE  RAILROAD  ERA  75 

fifty  cents  a  day  and  soup  kitchens  were  opened  to  relieve  the  distress.96 
In  spite  of  the  depression,  the  work  of  raising  the  grade  of  down- 
town area  was  being  pushed  vigorously  forward  and  the  growth  of 
the  West  Side  continued.  Eleven  hundred  new  buildings  out  of  a  total 
of  1,872  for  the  entire  city  were  erected  in  that  section  in  i858.97  Most 
of  the  West  Side  structures  were  only  cheap  frame  houses.  Neverthe- 
less, these  figures  indicate  that  new  construction  had  not  altogether 
stopped.  The  cost  of  building  had  fallen  at  least  one- third  since  1857 
and  this  stimulated  some  new  projects.98 

Most  of  the  holders  of  real  estate  held  firmly  during  1858  to  the  peak 
prices  of  1856  according  to  the  Chicago  Daily  Press  and  Tribune,  which 
stated  in  its  annual  review  on  January  i,  1859:  "Those  who  are  able  to 
hold  them  [their  real  estate  investments]  will  not  sell  below  the  figures 
ruling  two  years  ago,  and  indeed  in  some  parts  of  the  city  real  estate  is 
held  at  from  10  to  20  per  cent  advance  upon  those  figures."  It  was  ad- 
mitted, however,  that  the  "lame  ducks"  were  being  forced  to  let  go  of 
their  property  at  great  sacrifices,  while  the  number  of  newspaper  no- 
tices of  foreclosures  and  sheriff's  sales  was  greatly  increasing.99 

The  year  1859. — There  was  some  improvement  in  general  business 
conditions  in  Chicago  in  1859,  with  a  slight  gain  in  lumber  receipts,  a 
considerable  gain  in  the  hog-packing  business,  and  no  further  appre- 
ciable declines  in  grain  shipments  or  in  railway  earnings,  but  the  vol- 
ume of  building  continued  to  decline  from  $3,246,400  in  1858  to  $2,- 
044,000  in  i859IO°  and  land  values  had  by  this  time  fallen  sharply. 
John  S.  Wright,  in  a  letter  of  March,  1860,  says  that  "all  property  but 
central  has  depreciated  at  least  one-half  since  1857. "I01 

The  year  1860. — Although  the  total  liabilities  involved  in  failures  in 
Chicago  declined  from  $2,651,000  in  1859  to  $1,288,589  in  i86o,102  and 
the  Illinois  banks  of  issue,  having  successfully  weathered  the  storm  of 
1857,  seemed  to  be  in  a  highly  prosperous  condition,  the  value  of  new 
buildings  again  fell  to  $1,188,300  in  1860  and  rents  and  land  values103 

96  Goodspeed  and  Healy,  op.  tit.,  I,  280,  285. 

"  Chicago  Daily  Press  and  Tribune,  January  i,  1859. 

*8  Ibid .  99  ibid. 

100  Chicago  Press  Tribune,  January  4,  1860. 

101  John  S.  Wright,  Chicago,  Past,  Present  and  Future  (Chicago,  1868),  p.  12. 
103  Chicago  Tribune,  January  i,  1861. 

J°3  "Great  numbers  of  workers  left  the  city  for  want  of  employment  and  those  who  re- 
mained were  obliged  to  go  into  narrowed  quarters  to  reduce  expenses.  This  caused  a  great 


76  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

declined  still  further.  John  S.  Wright,  who  was  a  close  observer  and  in- 
clined to  be  optimistic  rather  than  the  reverse,  stated  in  his  circular 
letter  of  1861,  "Prices  of  central  lots  are  reduced  nearly  one-half  and  of 
out-property  about  three-fourths,"104  and  sample  sales  bear  out  this 
assertion.  According  to  William  J.  Kerfoot,  most  of  the  working  people 
who  had  bought  lots  south  of  Twelfth  Street  prior  to  1857  had  forfeited 
their  equities  by  1860.  According  to  Colbert: 

The  depreciation  in  the  prices  of  corner  lots  was  great  in  the  winter  of  1857,  but 
it  was  much  greater  in  1858  and  1859,  as  payments  matured  which  could  not  be 
met.  A  large  proportion  of  the  real  estate  in  the  city  had  been  bought  on  canal  time; 
they  had  depended  upon  a  continual  advance  in  quoted  values  to  meet  those  pay- 
ments and  found  they  could  not  even  sell  at  a  ruinous  sacrifice.105 

The  collapse  of  the  state  banks  of  issue,  1861-63. — The  outbreak  of  the 
Civil  War  revealed  the  weak  spot  in  the  Illinois  bank-note  circulation  of 
$12,320,964  secured  by  deposits  of  $14,000,000  in  bonds,  of  which 
$9,527,500  were  bonds  of  southern  states.106  By  May  15, 1861,  Missouri 
bonds  had  declined  to  35  cents  on  the  dollar,  Tennessee  bonds  to  45 
cents,  and  Virginia  bonds  to  43  cents,107  and  as  the  security  back  of  the 
notes  was  thus  weakening,  the  state  auditor  called  on  the  banks  for 
additional  bonds,  which  17  of  the  banks  affected  were  unable  to  furnish. 
The  notes  of  the  state  banks  soon  fell  into  a  chaotic  condition,  fluctuat- 
ing daily  and  ranging  in  value  from  20  cents  on  the  dollar  to  par.  By 
1862  the  notes  of  only  3  banks  in  Illinois  were  at  par,  and  by  1864,  after 
98  banks  had  suspended,  only  23  were  attempting  to  maintain  an  exist- 
ence.108 A  situation  in  which  there  was  circulating  in  the  United  States 
7,000  genuine  notes  of  1,600  different  state  banks  of  issue  which  were  at 
varying  rates  of  discount,  mingled  with  which  were  5,500  varieties  of 
altered  and  counterfeit  notes,  was  a  serious  handicap  to  every  type  of 

many  residences  and  stores  to  be  vacated,  and  brought  about  a  reduction  in  rents  in  those 
still  occupied,  which  impoverished  even  those  who  were  able  to  hold  on  to  their  property. 
Many  hundreds  of  lots  and  houses  were  abandoned  by  those  who  had  made  only  partial 
payments,  and  the  holders  of  mortgages  needed  no  snap-judgment  to  enable  them  to  take 
possession"  (quoted  in  Chamberlin,  op.  cit.,  pp.  201-2). 

104  Wright,  op.  cit.,  p.  14. 

los  Colbert  and  Chamberlin,  Chicago  and  the  Great  Conflagration,  pp.  95-  96. 

106  Andreas,  op.  cit.,  II,  619. 

107  Financing  an  Empire:  A  History  of  Banking  in  Illinois  (Chicago:  S.  J.  Clarke  Pub- 
lishing Co.,  1926),  1, 159. 

108  Ibid. 


THE  RAILROAD  ERA  77 

business,  but  fortunately  this  confusion  was  all  swept  away  by  the  new 
national  banking  act  of  1863  and  the  later  tax  on  state  bank  notes. 

Meanwhile,  notwithstanding  the  gloom  that  attended  the  beginning 
of  the  war  with  the  southern  states,  in  which  building  operations  prac- 
tically came  to  a  standstill,  with  only  $797,800  worth  of  new  buildings 
in  1 86 1  and  $525,000  worth  in  i862,109  the  European  need  for  American 
wheat  and  the  war  demands  for  grain  and  meat  sent  Chicago  wheat 
shipments  up  from  11,000,000  bushels  in  1858  to  24,000,000  bushels  in 
1 86 1,  and  corn  shipments  from  4,000,000  to  24,000,000  bushels  at  the 
same  time,  increased  the  number  of  hogs  packed  from  100,000  in  1857- 
58  to  970,000  in  1862-63,  and  gave  the  railroads  a  profitable  business  in 
transporting  soldiers  and  in  hauling  grain  and  live  stock.110  The  popula- 
tion of  the  West  Side  again  doubled  between  1856  and  1862,  increasing 
from  28,250  to  57,193,  while  the  number  of  people  in  the  entire  city  rose 
from  84,113  to  138,186  in  the  same  time.111 

The  horse  railways. — Meanwhile,  beginning  in  1859,  three  systems  of 
horse  street-car  lines  were  inaugurated,  one  in  each  division  of  the  city. 
The  South  Side  system  starting  at  State  and  Randolph  had  a  single- 
track  line  on  State  Street  as  far  south  as  Roosevelt  Road  by  April  25, 
1859,  and  before  the  end  of  1859  had  been  extended  to  Twenty-second 
and  State  streets,  thence  east  on  Twenty-second  to  Cottage  Grove  and 
down  Cottage  Grove  to  the  Fair  Grounds  at  Thirty-fifth  Street."2  A 
branch  from  the  State  Street  line  was  built  down  Archer  Avenue  to 
Bridgeport  near  Ashland  Avenue  in  1864  and  1865,  the  State  Street 
line  was  extended  from  Twenty-second  to  Thirty-first  Street  in  1866, 
and  a  line  was  constructed  down  Indiana  Avenue  from  Twenty-second 
to  Thirty-first  in  1864.  The  State  Street  line  was  extremely  crowded 
from  the  very  beginning,  because  the  streets  had  fallen  into  such  bad 
repair  that  it  was  difficult  to  drive  horses  over  them. 

The  West  Side  system  had  two  main  lines  running  due  westward,  one 
on  Madison  Street  and  the  other  on  Randolph  and  Lake  streets.  Cross- 
ing these  two  lines  at  right  angles  was  the  Halsted  Street  line,  which 
turned  northwest  along  Milwaukee  Avenue  and  southwest  along  Blue 

109  Chicago  Tribune,  January  i,  1863. 

110  Moses  and  Kirkland,  op.  cit.,  I,  393. 
'"Ibid.,  II,  613. 

112  Ibid.,  pp.  529-30;  also  letter  and  map  from  Mr.  Sullivan,  assistant  to  president  of 
Chicago  Surface  Lines.  See  maps  showing  extensions  of  surface  lines  (Fig.  23,  supra). 


78  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

Island  Avenue.  All'of  these  lines  except  the  one  on  Lake  Street  con- 
verged at  Madison  and  Halsted  streets  and  sent  their  combined  traffic 
load  over  Madison  Street  to  the  central  business  district.  The  North 
Side  system  began  on  the  north  side  of  the  main  river.  It  had  its  main 
stem  on  Clark  and  Broadway,  which  was  completed  by  1863,  north  to 
Irving  Park  Boulevard  and  thence  west  to  Ashland.  In  1859  a  short 
branch  was  constructed  on  Chicago  Avenue  from  Clark  Street  west  to 
the  north  branch  of  the  river,  and  in  1865  another  branch  was  built 
down  Division  Street  to  Clybourn  and  thence  to  Larrabee  Street.113  An 
attempt  to  unite  the  North  Side  and  South  Side  systems  by  laying 
tracks  over  the  Clark  Street  bridge  was  defeated  by  an  injunction  in 

1860.  The  horse  street-car  lines  thus  followed  in  the  main  the  principal 
routes  of  the  omnibus  lines;  and,  while  the  older  system  continued  to 
compete  with  the  car  lines  for  a  time,  it  was  handicapped  by  the  bad 
condition  of  the  pavements  and  the  new  car  lines  soon  gained  most  of 
the  traffic. 

Land  values  in  1862. — Notwithstanding  the  rise  of  Chicago  to  the 
leading  position  in  pork-packing  by  1863,  the  rapid  growth  of  the  city, 
particularly  the  west  division  of  it,  in  population,  and  a  big  increase  in 
the  grain  trade,  land  values  in  Chicago  remained  extremely  depressed 
during  1862.  Washington  Street,  east  of  Clark  Street,  valued  at  $500  a 
foot  in  1856,  had  dropped  to  $250  a  foot  by  1861 ;  Madison  near  Clark 
and  State  near  Monroe  had  fallen  from  $250  and  $300  a  foot  to  $150  a 
foot  in  the  same  period.  In  1857,  $80,000  was  offered  for  the  vacant 
lot,  80  by  1 80  feet,  on  the  northwest  corner  of  Randolph  and  Wells.  In 

1861,  when  the  same  land  was  improved  with  a  $140,000  building,  the 
entire  property  was  sold  for  the  cost  of  the  building  alone.  A  65-foot 
vacant  lot  on  Lake  Street  adjoining  the  corner  of  LaSalle  could  have 
been  sold  for  $65,000  in  1857.  In  1861  it  sold  for  the  same  price  after  it 
had  been  improved  with  an  $80,000  building."4  Vacant  lands  close  to 
the  settled  areas  on  the  North  Side  and  South  Side  showed  declines  of 
50  per  cent  in  sales  values,  while  thirty  sales  of  outlying  acres  showed  an 
average  fall  of  67  per  cent  from  1856-57  to  i86o-63.IIS  The  decline  on 
the  near  West  Side,  however,  was  slight,  as  the  continued  growth  of 
this  section  during  the  depression  sustained  its  values.  While  the  data 

113  See  map  of  transportation  lines,  1880  (Fig.  23,  p.  126). 

114  Chicago  Tribune ,  February  13,  1891. 

115  For  sales  during  1860  to  1863  see  Fig.  14. 


MAP  OF  CHICAGO 

-SHOWING- 
LAND  VALUES -I860  TO  1863 
INDICATED  BY  SALES  OF  ACRE  TRACTS 


LEGEND 


LOCATION  AND  EXTENT  OF  AREAS  SOLDi 
THE  PRICE  IN  DOLLARS  PER  ACRE  IS 
INDICATED  BY  THE  FIGURE  IN  THE  SAME 
SQUARE  MILE  SECTION 


FIG.  14 


80  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

for  the  period  from  1859  to  1863  are  more  meager  than  for  any  other 
period,  it  can  be  estimated  from  the  basis  of  the  sales  available  and 
from  the  statement  of  John  S.  Wright,  who  had  an  intimate  knowledge 
of  the  facts  and  who,  as  an  enthusiastic  real  estate  promoter,  would  be 
inclined  to  minimize  the  extent  of  the  decline  in  land  values,  that  the 
value  of  Chicago  land  had  fallen  from  its  total  of  $126,000,000  in  1856 
to  not  over  $60,000,000  in  i86i."6 

116  Andreas,  op.  cit.,  II,  571 :  "In  1858  the  purchases  that  were  made  in  prior  years  under 

speculative  influences  were  largely  on  time The  crash  of  1857  lessened  the  possibility 

of  making  such  payments.  In  consequence  of  this  difficulty,  the  unpromising  aspect  of  the 
future  and  the  depression  in  prices  brought,  since  their  purchase  of  the  realty,  the  owners 
very  generally  relinquished  their  purchases  and  lost  all  payments  made  on  account.  In 
1859  real  estate  had  a  hard  struggle  to  maintain  any  recognition,  except  that  it  was  a  quick- 
sand wherein  all  money  deposited  would  only  be  swallowed  up." 


CHAPTER  III 

THE  LAND  BOOM  THAT  FOLLOWED  A  PANIC, 
A  CIVIL  WAR,  AND  A  GREAT  FIRE, 

1863-77 

A.   THE  LATER  CIVIL  WAR  PERIOD,  1863-65 

The  physical  growth  of  Chicago  and  the  rise  of  its  land  values,  as 
indicated  in  the  last  chapter,  were  temporarily  checked,  first,  by  the 
panic  of  1857,  and,  second,  by  the  outbreak  of  the  Civil  War.  The  loss 
of  southern  credits,  the  collapse  of  the  state  banks  of  issue,  whose, 
notes  were  secured  largely  by  the  bonds  of  the  seceding  states,  and  the 
fears  that  the  permanent  disruption  of  the  Union  would  destroy  old 
trade  relationships  had  at  first  intensified  the  depression  that  followed 
the  commercial  crisis  of  1857.  The  war  that  had  seemed  so  disastrous 
to  local  business  interests  in  1861  had,  however,  assumed  an  entirely 
different  aspect  by  the  fall  of  1862.  The  western  agricultural  states  that 
had  supplied  the  cotton-raising  states  with  some  of  the  latter's  food 
found  that  their  southern  market  connections  were  severed  by  war,  at 
the  very  time  when  the  war  requirements  of  the  North  and  the  needs 
of  Europe,  now  much  greater  because  of  poor  crops  abroad  in  1860, 
1861,  and  1862,  were  rapidly  increasing  the  eastern  market  for  grain 
and  meat  products.  As  the  railroad  center  of  the  West  and  the  termi- 
nus of  the  eastern  lines,  Chicago  was  the  collecting  and  forwarding  point 
of  this  suddenly  increased  flow  of  foodstuffs  from  the  West  to  the  Atlan- 
tic seaboard.  From  1860  to  1862  the  total  grain  receipts  of  Chicago  in- 
creased from  thirty-one  million  to  over  fifty-six  million  bushels.1  The 
city  became  the  leading  pork-packing  center  of  the  world. 

Chicago  profited  by  the  Civil  War  in  many  other  ways.  The  draft, 
depleting  the  labor  supply  on  the  farms,  accelerated  the  demand  for 
Chicago-built  farm  machinery.  The  movements  of  soldiers  and  muni- 
tions of  war  gave  a  heavy  volume  of  profitable  business  to  the  Chicago  • 
railroads.  The  imperative  war  demands  for  food  products,  wagons, 
uniforms,  and  camp  equipment  forced  a  rapid  development  of  local 

1  Chamberlin,  op.  cit.,  p.  285. 

81 


82  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

firms  engaged  in  manufacturing  and  distributing  these  essential  sup- 
plies. Far  removed  from  the  seat  of  actual  conflict,  Chicago  received 
the  influx  of  capital  whose  security  was  endangered  in  the  border  states. 
It  was  the  Mecca  of  draft  dodgers  and  war  profiteers  as  well.  Further- 
more, the  financial  requirements  of  war  had  led  to  the  establishment  of  a 
national  banking  system  in  1863  and  to  an  inflation  of  the  currency 
with  a  resulting  rise  in  prices  that  presented  opportunities  for  making 
great  profits  to  the  holders  of  war  contracts.  Seventeen  national  banks 
in  Chicago  by  1865  attested  to  the  rapid  rise  of  its  new  financial  order. 
The  scale  of  business  operations  and  the  magnitude  of  profits  were 
lifted  by  war  to  an  altitude  hitherto  unknown.  During  the  period  of  the 
Civil  War,  Chicago,  as  Colbert  said,  "became  the  paradise  of  workers 
and  speculators."2 

The  war-created  business  and  industries  of  Chicago  attracted  labor- 
ers from  Canada  and  from  Europe.  Its  population  increased  from  109,- 
263  in  1860  to  187,446  in  1865.  The  annual  value  of  new  construction 
advanced  from  the  low  ebb  of  $525,000  in  1862  to  $2,500,000  in  1863, 
and  $4,700,000  in  1864.3  By  the  end  of  1864  Chicago  was  solidly  built 
up  for  three  miles  in  every  direction  from  its  center,  with  a  settled 
area  of  eighteen  square  miles.4  The  purchase  of  land  along  the  horse- 
car  lines  and  adjacent  to  the  occupied  portions  for  actual  building  pur- 
poses had  raised  the  value  of  such  close-in  vacant  land  from  10  to  15 
per  cent  during  1864.  At  the  same  time  rising  rents  of  improved  busi- 
ness property  in  the  downtown  area  had  caused  a  rise  of  20  per  cent  in 
land  values  in  the  business  center.5  Compared  with  the  great  advances 
that  had  taken  place  in  commodity  prices,  however,  these  gains  in  land 
values,  confined  as  they  were  to  a  few  localities,  were  small. 

B.   THE  POST-WAR  BOOM,  1865-71 

Growth  of  Chicago's  trade  and  manufactures,  1865-71. — The  transi- 
tion from  war  to  peace  caused  marked  industrial  readjustments.  The 
prices  of  the  leading  staple  commodities  had  declined  50  per  cent  from 
September,  1864,  to  May,  i865.6  The  demand  for  war  materials 
abruptly  ceased.  Thousands  of  soldiers  had  to  find  places  in  factories  or 

2  Colbert  and  Chamberlin,  op.  cit.  (1872),  p.  116. 

3  Chicago  Tribune,  January  i,  1865. 

«  Colbert  and  Chamberlin,  op.  cit.,  p.  119. 
Ibid.,  p.  118.  6  See  Fig.  95. 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  83 

on  the  farms.  The  South,  prostrated  by  defeat,  with  its  old  slave- 
owning  aristocracy  ruined,  no  longer  afforded  a  profitable  market  for 
the  products  of  the  North. 

In  spite  of  these  adverse  factors,  the  North  quickly  entered 
into  an  era  of  rapid  industrial  expansion.  The  introduction  of  the^. 
Bessemer  process  for  making  steel  and  the  use  of  coke  for  smelting  iron 
ore — both  coming  into  use  at  the  close  of  the  Civil  War — caused  an 
enormous  growth  of  bituminous  coal  mining  and  of  the  iron  and  steel 
industries.  The  railroad  mileage  of  the  United  States  doubled  from 
1865  to  1873,  33,000  miles  being  constructed  in  the  six  years  preceding 
the  panic  of  1873. 

Chicago  was  in  a  position,  situated  as  it  was  between  the  thick  de- 
posits of  Illinois  coal  and  the  rich  iron  mines  of  the  Mesabi  range,  wifch 
the  Great  Lakes  connecting  the  two,  to  reap  exceptional  gains  from 
this  industrial  revolution.  Already  paramount  as  a  railroad  center  even 
before  the  Civil  War,  the  extension  of  the  railway  net  westward  from 
the  Mississippi  River  added  the  rapidly  growing  West  to  its  hinterland 
and  absorbed  portions  of  the  tributary  territory  of  its  rivals.  The  Bur- 
lington and  Rock  Island  railroads  made  Iowa,  Kansas,  and  Nebraska 
dependent  on  the  Chicago  market,  and  the  Chicago  and  Alton  Rail- 
road diverted  much  of  the  trade  of  southern  Illinois  and  eastern  Mis- 
souri from  St.  Louis  that  was  at  their  very  door  to  the  city  on  the  lakes.7 
The  completion  of  the  Union  Pacific  and  the  Central  Pacific  across  the 
continent  in  1869  brought  Chicago  in  contact  with  the  Pacific  Coast 
and  the  trade  of  the  Orient.  Such  was  the  wider  market  gained  for 
Chicago  by  the  extension  of  the  mileage  of  its  railroads  from  4,912  in 
1860  to  7,019  in  1869,  while  the  profits  to  the  railroads  themselves  were 
shown  by  an  increase  in  their  earnings  from  $17,609,314  to  $48,886,- 

305  -8 

The  Chicago  wholesale  houses  took  full  advantage  of  the  opportu- 
nity created  by  the  railroads.  Not  waiting  for  business  to  come  to  them 
through  the  new  channels,  they  sent  out  "drummers"  to  the  western 
states  to  solicit  orders — a  business  policy  unknown  before  the  war.  As 
a  result  of  such  tactics  and  the  advantages  of  their  position,  the  whole- 
sale and  produce  business  of  Chicago  increased  from  less  than  $100,- 
000,000  in  1860  to  $400,000,000  annually  after  i868.9  Whereas  before 

7  Lewis  and  Smith,  Chicago:  A  History  of  Its  Reputation,  p.  108. 

8  Moses  and  Kirkland,  op.  cit.,  I,  142.  9  Chamberlin,  op.  oil.,  p.  121. 


84  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

the  Civil  War  there  was  not  a  mercantile  house  in  Chicago  with  an 
annual  volume  of  sales  exceeding  $600,000,  in  1866  there  were  twenty- 
two  firms  whose  sales  exceeded  $1,000,000  a  year.  In  the  one  year  1872 
one  firm  alone,  Field,  Leiter  and  Company,  reported  sales  of  $20,000,- 
ooo  and  a  profit  of  $i,ooo,ooo.10 

Meanwhile,  the  traffic  in  the  original  staple  articles  of  Chicago's 
commerce,  the  lake-carried  lumber  and  grain,  had  been  continually 
growing.  The  tonnage  of  lake  vessels  had  increased  from  1,931,692  in 
1860  to  3,125,400  in  1869.  As  many  as  three  hundred  sailing  vessels, 
loaded  with  lumber,  entered  the  harbor  within  twelve  hours,  passing 
the  drawbridges  at  the  rate  of  two  a  minute."  Such  was  the  flood  of 
pine  lumber  that  poured  into  Chicago  annually  when  its  volume 
reached  a  billion  board  feet  in  1868,  a  fourfold  increase  over  1861; 
and  when  it  required  five  hundred  acres  of  lumber  yards  along  the 
south  branch  of  the  river  for  the  temporary  storage  of  as  many  as 
fifty  million  boards."  Millions  of  these  pine  boards  from  the  forests  of 
Michigan  were  hauled  westward  on  the  railroads,  and  other  millions 
became  embodied  in  the  thousands  of  pine  structures  that  were  an- 
nually going  up  in  Chicago. 

The  annual  receipts  of  sixty  million  bushels  of  grain  were  handled 
with  greater  facility  and  dispatch  through  the  medium  of  the  seventeen 
elevators  of  1870  than  a  million  bushels  of  grain  had  been  marketed  by 
the  jostling  teamsters  on  Lake  Street  in  1847.  Warehouse  receipts  and 
dealings  in  futures,  inaugurated  by  government  necessities  in  the  Civil 
War,  had  transformed  the  grain  market  from  the  dealing  in  a  bulky 
commodity  by  actual  inspection  and  delivery  of  the  thing  itself  to  a 
transfer  of  the  rights  of  ownership  to  so  many  bushels  of  grain  of  a  given 
quality  stored  in  an  elevator. 

Of  greater  significance,  however,  to  the  growth  of  Chicago  in  this 
period  than  either  the  wholesale  or  the  grain  and  lumber  trades  was  the 
sensational  growth  of  its  manufacturing.  Whereas  before  the  Civil 
War  the  city  of  Chicago  was  known  as  the  great  "northwestern  ex- 
change," a  buyer  and  seller  on  a  great  scale,  but  as  a  fabricator  of  but 
a  few  articles,  by  1867  nearly  everything  of  much  bulk  used  on  the  rail- 
roads, in  farming  or  in  the  building  or  furnishing  of  houses,  was  made 
in  Chicago.  "The  prairie  world  is  mowed  and  reaped  by  machines  made 

10  Ibid.,  p.  123. 

11  James  Parton  in  Atlantic  Monthly,  March,  1867,  P-  335- 
"  Chamberlin,  op.  cit.,  p.  282. 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  85 

in  Chicago."13  In  addition  to  heavy  iron,  steel,  and  wood  products, 
shoes,  clothing,  watches,  soap,  and  distilled  liquors  were  produced  in 

CHICAGO  TRADE  AND  MANUFACTURES  -  1840  TO  1031 

NOTE;  1  =  3.000,000  BOARD  FEET  OF  LUMBER,  10,000  HOGS  PACKED, 
100,000  BUSHELS  GRAIN:  4,000  POPULATION,  $10,000,000 


FIG.  15 

large  quantity.  The  meat-packing  industry,  concentrated  after  1865 
in  375  acres  as  Thirty-ninth  and  Halsted  streets,  with  100  acres  of  pens, 

'3  Parton,  op.  «/.,  p.  337. 


86  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

had  secured  connections  with  all  the  railroads,  and  continued  to  hold  its 
leading  position.  In  short,  the  rise  in  the  value  of  Chicago's  manu- 
factured products  from  $15,000,000  in  1856  to  $176,000,000  in  1873  and 
the  increase  in  the  number  of  workers  employed  from  10,000  to  60,000 
were  results  of  its  expanding  market  and  a  chief  cause  of  its  growing 
population.14 

The  rapid  growth  of  the  city  from  1865  to  1871  is  indicated  by  the 
increase  in  its  population  from  187,000  to  325,000  and  the  expenditure 
of  over  $76,000,000  for  new  construction  in  the  seven  years  from  1864 
to  1870  inclusive.  The  total  number  of  buildings  in  Chicago  had  in- 
creased from  3,742  in  1848  and  19,000  in  1857  to  40,000  in  1868  and 
56,000  in  i87o.IS  The  rate  of  new  growth  gained  rapid  momentum 
after  the  Civil  War,  as  Table  II  shows.16 

TABLE  II 
VALUE  OF  NEW  BUILDINGS  ERECTED  IN  CHICAGO  BY  YEARS,  1864-70 

1864 $4,700,000      1868 $14,000,000 

1865 6,950,000      1869 11,000,000 

1866 11,000,000      1870 20,000,000 

1867 8,500,000 

Public  improvements  kept  pace  with  private  construction.  From 
1865  to  1871  the  number  of  miles  of  sewers  was  increased  from  75  to 
151.  When  the  increase  in  the  volume  of  sewage  and  the  industrial 
wastes  poured  into  the  stagnant  Chicago  River  made  the  stench  al- 
most intolerable  in  the  sixties,  the  normal  flow  of  the  Chicago  River 
was  reversed  by  deepening  the  Illinois-Michigan  Canal  in  1871,  thereby 
creating  a  current.17  When  the  purity  of  the  water  supply  was  also 
endangered  by  the  sporadic  discharge  of  the  wastes  of  the  Chicago 
River  into  the  lake,  a  new  tunnel  under  the  lake  to  a  crib  two  miles  out 
was  completed  in  March,  i867.18  Over  18,000,000  gallons  of  water 
flowed  daily  through  154  miles  of  pipe  in  1867,  and  this  was  increased 
to  24,000,000  gallons  flowing  through  275  miles  of  pipe  in  187 1.19 
Meanwhile,  the  old  plank  pavements  had  been  discarded  in  favor  of 

'*  Industrial  Chicago,  III,  514.  «  Chamberlin,  op.  cit.,  p.  67. 

16  Moses  and  Kirkland,  op.  cit.,  I,  142-43;  Chicago  Tribune,  December  30,  1865. 

17  Colbert  and  Chamberlin,  op.  cit.,  p.  160. 

18  James  W.  Sheahan  and  George  P.  Upton,  The  Great  Conflagration  (1872),  p.  41. 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  87 

wooden  blocks,  stone,  and  macadam,  of  which  the  first  was  the  favorite. 
The  number  of  miles  of  street  paved  with  wooden  blocks  increased 
from  i\  in  1865  to  57  at  the  beginning  of  1871,  while  30  other  miles 
were  paved  with  macadam,  gravel,  cinders,  or  boulder  stones.20  Not- 
withstanding this  rapid  progress  in  paving,  some  446  miles  of  streets, 
or  83  per  cent  of  the  total,  had  no  paving  of  any  kind.  The  number  of 
miles  of  plank  sidewalk  had  increased  from  159  in  1854  to  900  in  1871, 
and  the  amount  of  stone  sidewalks  from  500  feet  to  30  miles  in  the  same 
interval.  There  were  6,555  lamp  posts  in  1871  as  compared  with  2,500 
in  1865.  Nineteen  new  bridges  had  been  built  in  the  seven  years,  and 
fifteen  of  these  were  outside  the  main  business  district,  serving  to 
connect  the  outlying  West  Side  with  the  North  and  South  sides.  By 
1871  there  were  six  railroad  and  twenty-seven  passenger  bridges,  cost- 
ing from  $20,000  to  $48,000  each,  over  which  246,015  pedestrians  and 
45,306  vehicles  passed  on  March  31,  1871,  with  an  additional  7,231 
persons  and  1,616  vehicles  passing  through  the  Washington  Street 
tunnel  on  the  same  day.21  This  total  of  253,246  persons  and  46,922 
vehicles  in  1871  shows  a  marked  increase  over  the  73,164  persons  and 
18,404  vehicles  passing  over  all  the  bridges  of  Chicago  in  a  single  day 
in  1855,  but  this  reflected  merely  a  gain  in  population  and  not  a 
greater  mobility. 

The  transformation  Chicago  underwent  in  the  fourteen  years  from 
1853  to  1867  may  also  be  visualized  by  a  comparison  of  the  following 
description  with  one  previously  given  for  1853. 22 

In  the  heart  of  the  town  the  stranger  beholds  blocks  of  stores  solid,  lofty  and  in 
the  most  recent  taste,  hotels  of  great  magnificence  and  public  buildings  that  would 
be  creditable  to  any  city.  The  streets  are  as  crowded  with  vehicles  as  any  in  New 
York,  and  there  is  nothing  exhibited  in  the  windows  of  New  York  which  may  not 
be  seen  in  those  of  Chicago.  As  the  visitor  passes  along  he  sees  at  every  moment 
some  new  evidence  that  he  has  arrived  in  a  rich  metropolis.  Now  it  is  a  gorgeous 
and  enormous  carpet  house  that  arrests  his  attention,  now  a  huge  dry  goods  store 
or  a  vast  depot  of  groceries.  The  next  moment  he  finds  himself  peering  into  a 
restaurant  as  splendid  as  a  steamboat  and  larger  than  Taylor's  or  into  a  dining 
room  window,  where  in  addition  to  the  delicacies  of  the  season  there  is  a  spacious 
cake  of  ice  covered  with  naked  frogs,  reposing  picturesquely  in  parsley.  Farther 
on  he  pauses  before  a  jeweler's,  brilliant  with  gold,  silver,  diamonds  and  pictures, 
where  a  single  item  of  last  year's  business  was  the  sale  of  3200  watches. 

Along  the  lake,  south  of  the  river  for  two  or  three  miles  extend  the  beautiful 

20  Colbert  and  Chamberlin,  op.  tit.,  p.  161. 

21  Ibid.,  p.  160.  22  See  above,  chap,  ii,  p.  62. 


88  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

avenues  which  change  insensibly  into  those  streets  of  cottages  and  gardens  which 
have  given  Chicago  the  name  of  the  Garden  City.  In  all  Chicago  there  is  not  one 
tenement  house.  Thrifty  workmen  own  the  houses  they  live  in,  and  the  rest  can 
still  hire  a  whole  house.  Consequently,  seven-tenths  of  Chicago  consists  of  small 
wooden  houses  in  streets  with  wooden  sidewalks  and  roads  of  prairie  black.^ 

The  appearance  of  the  city  had  been  still  further  improved  by  1871. 
At  that  time  there  were  60,000  buildings,  40,000  of  which  consisted  of 
wooden  houses  of  an  average  value  of  about  $1,000  each.  In  the  fash- 
ionable avenues  of  the  South  Side  there  were  hundreds  of  marble- 
front  dwellings  and  ornate  homes  ranging  in  value  from  $8,000  and 
$10,000  each  to  $25,000  and  $100,000.  In  the  downtown  area,  with  its 
seventy-nine  business  blocks  built  of  brick  and  stone  to  a  height  of 
from  four  to  six  stories,  there  were  over  sixty  stores,  hotels,  public 
buildings,  churches,  depots,  and  elevators  whose  value  exceeded  $100- 
ooo  each.24 

Chicago  shared  the  zeal  for  public  improvements  with  many  other 
American  cities  in  that  post-war  decade.  It  was  an  era  of  extravagance 
and  personal  display,  and  people  were  motivated  by  a  desire  to  "get 
rich  quick"  regardless  of  the  means  employed.  In  1868  and  1869  there 
was  widespread  corruption  in  municipal  and  national  politics.  It  was 
the  time  of  the  ugly  scandals  of  the  Credit  Mobilier  in  connection  with 
the  building  of  the  Union  Pacific  Railroad,  of  the  wholesale  plundering 
of  the  Tweed  ring  in  New  York  City,  of  Jay  Gould's  attempt  to  corner 
the  gold  market  by  political  manipulation,  of  reckless  railroad  financing, 
of  Boss  Murphy  in  Washington,  and  of  the  knavery  of  the  carpet- 
baggers in  the  South.25  In  this  general  let-down  of  morals,  public  and 
private,  that  followed  in  the  wake  of  war,  Chicago  did  not  escape. 
Extravagance,  lavish  expenditures  for  improvements,  and  some  po- 
litical corruption  were  blended  in  the  land  boom  that  culminated  in 
1873- 

C.   RISE  IN  CHICAGO  LAND  VALUES,  BY  USE  AND  OCCUPATION 
AREAS,  1865-71 

The  precipitous  rise  in  Chicago  land  values  which  began  in  1865, 
after  reaching  a  peak  in  certain  downtown  sections  in  1869,  gained  a 

a*  Parton,  op.  tit.,  pp.  338-39.  2"  Colbert  and  Chamberlin,  op.  cit.,  pp.  288-94. 

*s  For  a  contemporary  impressionistic  account  of  the  land  speculation  and  political  cor- 
ruption of  this  era  see  Mark  Twain  and  Charles  Dudley  Warner,  The  Gilded  Age  (Hartford: 
American  Publishing  Co.,  1873),  particularly  pp.  254-56.  For  speculation  in  Paris  in  1867 
see  Emile  Zola's  novel,  Uargeni. 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  89 

fresh  impetus  near  the  parks  and  boulevards  in  1870  and  1871.  After 
a  check  and  decline  caused  by  the  great  fire  on  October  9,  1871,  the 
rise  again  continued  during  1872  and  the  spring  of  1873  in  certain  spots 
until  the  record  altitude  was  reached  just  before  the  panic  of  1873.  The 
entire  movement  cannot  be  described  without  an  account  of  the 
changes  in  the  use  and  occupation  of  land  in  certain  neighborhoods 
which  accompanied  it. 

The  main  business  district. — In  the  post-war  period,  Chicago  not 
only  expanded  into  the  prairie  both  solidly  in  long  gangling  lines  and  in 
detached  settlements,  but  it  also  made  a  revolutionary  shift  at  its  very 
center.  During  the  Civil  War,  Lake  Street  continued  to  be  the  leading 
retail  and  financial  street  of  the  city.  The  corner  of  Clark  and  Lake 
Street  in  1865  was  the  best  business  corner  in  Chicago,  and  it  was  val- 
ued at  $2,000  a  front  foot.  Even  at  this  time  the  growing  financial 
interests  were  crowded  southward  down  LaSalle  and  Clark  streets.  The 
retail  trades  were  overflowing  along  Clark,  Dearborn,  and  State  streets 
toward  Madison  Street.  The  enlarged  wholesale  trades  were  encroach- 
ing on  the  fashionable  residences  at  the  north  end  of  Wabash  Avenue. 
The  first  important  break  toward  the  south  came  in  1865  when  the 
Board  of  Trade  moved  its  headquarters  from  LaSalle  and  South  Water 
streets  to  Washington  and  LaSalle  streets.  The  move  was  successful, 
for  other  financial  houses  followed  the  Board  of  Trade  and  a  new  finan- 
cial center  was  established  that  formed  a  right  angle  at  Washington  and 
LaSalle  streets.  The  value  of  lots  on  Washington  Street  near  that  point 
increased  from  $150  a  front  foot  in  1862  to  $1,700  a  front  foot  in  1871. 
The  next  southward  projection  of  business  was  along  the  line  of  Clark 
Street,  which  had  the  heaviest  traffic  on  account  of  the  Clark  Street 
bridge  over  the  main  channel  of  the  river.  Retail  business,  flowing 
south  on  Clark  Street,  struck  a  new  center  of  gravity  at  Madison 
Street,  where  it  struck  the  heavy  tide  of  people  coming  from  the  west 
on  the  Madison  Street  horse-car  lines.  In  1869  the  corner  of  Madison 
and  Clark  streets,  selling  at  $3,000  a  front  foot,  was  acclaimed  the 
leading  business  corner  of  Chicago. 

Meanwhile,  the  converging  of  the  street-car  traffic  from  the  Cottage 
Grove,  Indiana,  State,  and  Archer  lines  on  State  Street  to  meet  the 
West  Side  lines  at  Randolph,  Madison,  and  Van  Buren  streets,  and  the 
southeastward  trend  of  the  fashionable  residential  area  were  favoring 
the  development  of  State  Street  as  the  leading  business  center.  Potter 


90  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

Palmer,  with  a  fortune  of  several  million  dollars  made  in  speculation 
in  cotton  during  the  Civil  War  at  his  disposal,  bought  three-quarters 
of  a  mile  of  State  Street  frontage.  State  Street  was  at  that  time  a  nar- 
row lane  between  rows  of  shanties,  but  Potter  Palmer  moved  back  the 
houses  on  his  lots  far  enough  to  allow  a  hundred-foot  street,  and  he 
coaxed  or  frightened  his  neighboring  owners  into  doing  likewise.  He 
then  gave  the  street  a  new  character  from  Washington  to  Quincy  streets 
by  building  a  great  store  on  the  corner  of  Washington  Street  and  by  re- 
placing the  shacks  at  the  southwest  corner  of  State  and  Quincy 
streets  with  a  magnificent  hotel.  The  hotel  he  operated  himself,  but  the 
store  he  induced  Field,  Leiter  and  Company  to  rent  for  $50,000  a  year 
in  1868.  The  removal  of  Marshall  Field,  the  recognized  leader  of  the 
merchants,  from  Lake  Street  to  State  Street  was  like  a  word  of  com- 
mand to  the  smaller  businessmen.26  The  exodus  from  Lake  Street  was 
almost  a  rout.  From  1869  to  1871  from  thirty  to  forty  marble-front 
buildings  were  erected  on  State  Street.27  The  effect  of  this  shift  was 
registered  by  the  sales  of  land  near  the  corner  of  State  and  Madison 
streets  at  $300  a  front  foot  in  1860,  $500  a  front  foot  in  1866,  and  $2,000 
a  front  foot  in  1869,  and  by  sales  of  lots  on  State  Street  near  Madison 
at  the  following  prices  per  front  foot:  $150  in  1862;  $300  in  1866; 
$500  in  1867;  $725  in  February,  1868;  $1,250  in  November,  1868;  and 
$2,000  in  i87i.28  All  of  the  downtown  streets  from  Washington  to 
Van  Buren  streets  were  sharing  in  an  advance  that  during  1868  and 
1869  was  so  rapid  that  it  was  said  to  be  possible  to  buy  one  day  and 
sell  at  a  profit  the  next. 

Meanwhile,  the  wholesale  trades  rushed  into  the  vacuum  created  by 
the  withdrawal  of  the  retail  and  financial  interest  from  Lake  Street, 
where  land  values  remained  stationary  at  not  over  $i,oooafront  foot. 
They  crowded  into  Randolph  Street  and  spread  down  Wabash  and 
Michigan  avenues,  sending  up  the  value  of  lots  on  Wabash  and  Michi- 
gan near  Jackson  and  Van  Buren  streets  from  $450  a  front  foot  in 
July,  1864,  to  $875  a  front  foot  in  August,  1868,  and  $1,250  a  front 
foot  in  March,  i869.29 

The  fashionable  residential  areas. — The  value  of  land  along  streets 
made  exclusive  through  their  occupancy  by  the  leaders  of  society  is  a 

26  Frederick  Francis  Cook,  Bygone  Days  in  Chicago  ("Chicago,  1910),  pp.  187-89. 

27  Sheahan  and  Upton,  op.  cit.,  p.  51. 

28  Shortall  and  Hoard  Abstracts,  Vol.  64,  pp.  783-85. 
2»  Ibid.,  Vol.  60,  pp.  850-54. 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  91 

direct  reflection  of  the  rise  of  a  newly  rich  class  during  and  after  the 
Civil  War  and  of  extravagant  tastes  on  the  part  of  hitherto  plain-living 
American  people  who  had  an  ambition  to  live  in  mansions  amid  fashion- 
able surroundings.  Groups  of  promoters  and  politicians  combined  to 
secure  such  public  improvements  as  sewers,  water  pipes,  and  wooden- 
block  pavements  on  the  streets  they  had  selected  for  development  as 
fashionable  sections.30  Most  of  the  improvements  installed  from  1865 
to  1871  were  either  in  the  downtown  district  or  in  these  select  areas, 
as  Figure  16  shows.  The  districts  of  workingmen's  homes  had  sewers 
and  pavements  only  on  their  main  business  thoroughfares.  The  upper- 
class  residential  streets  were  located  near  the  lake  front  on  the  North 
and  South  sides,  although  not  directly  on  the  lake  shore,  and  on  the 
West  Side  in  a  belt  directly  west  of  the  main  business  section.  In  every 
case  they  were  the  farthest  removed  from  the  open  sewer  of  the 
Chicago  River  and  the  odors  of  the  slaughter-houses,  tanneries,  and 
distilleries  that  lined  its  banks.  They  also  had  the  best  means  of  trans- 
portation to  the  downtown  area  and  were  most  abundantly  supplied 
with  such  public  facilities  as  sewers,  pavements,  sidewalks,  water,  and 
street  lamps.  The  working  population  was  barred  from  these  exclusive 
centers  by  the  price  of  the  land,  the  annual  wages  of  a  laborer  being 
insufficient  to  pay  even  the  interest  charges  on  one  of  these  vacant 
lots,  not  to  mention  the  taxes.  Whereas  a  manual  laborer  could  afford 
to  buy  or  pay  rent  on  a  house  costing,  exclusive  of  the  land,  no  more 
than  $1,000,  and  therefore  necessarily  built  of  pine  on  a  lot  of  no  greater 
value  than  the  house,  the  homesites  in  these  choice  avenues  cost  from 
$10,000  to  $25,000,  and  upon  them  were  built  homes  worth  from  $10,- 
ooo  to  $100,000  or  more. 

The  chief  trend  of  fashionable  development  in  this  period  was  south- 
ward. The  North  Side,  with  its  beautiful  trees,  some  as  tall  as  the 
spires  of  churches,  had  been  the  first  residential  center  of  the  social 
leaders.  Dearborn  and  LaSalle  streets,  valued  at  from  $150  to  $200  a 
front  foot  since  1856,  still  maintained  their  reputation,  but  the  constant 
opening  of  the  bridges  to  permit  the  passage  of  an  increasing  number 
of  ships  made  the  North  Side  exceedingly  difficult  of  access.  Some- 
times when  unfavorable  winds  detained  vessels  in  the  lake,  as  many  as 
three  hundred  were  waiting  to  enter  the  Chicago  River  at  one  time. 
The  description  of  the  following  scene,  occurring  in  1867,  shows  the  con- 
ditions prevailing  as  the  ships  filed  past  the  open  bridges: 

3°  Colbert  and  Chamberlin,  op.  tit.,  p.  446. 


MAP  OF  CHICAGO 

SHOWING 

SEWERS,  PAVED  STREETS  AND  BRIDGES 
1873 


LEGEND 

—  SEWERS  ••:•-  UNPAVED  STREETS 

=  STREETS  BWED  WITH  WOODEN  BLOCKS  OR  GRAVEL 
BRIDGES  J     TUNNELS 


FIG.  1 6 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  93 

At  all  the  bridges  and  on  both  sides  of  them  crowds  of  impatient  people  and 
long  lines  of  vehicles  extending  farther  back  than  the  eye  can  reach  are  waiting. 
Now  and  then  the  bridges  can  be  closed  for  a  short  time  and  there  is  a  tremendous 

rush  to  cross These  are  exceptional  days  and  there  are  other  days  in  which  the 

bridges  are  seldom  opened.  But,  we  are  informed  that  a  business  man  who  has 
any  important  appointment  in  any  part  of  town  allows  one  hour  for  possible  de- 
tention at  the  bridges.  Omnibuses  leaving  the  hotel  for  a  depot  a  quarter  of  a  mile 
distant,  but  on  the  other  side  of  the  river,  start  an  hour  before  the  departure  of 
the  train.'1 

To  add  to  the  difficulties,  no  street  cars  crossed  the  bridges  from  the 
North  Side,  while  the  railroad  trains  crossing  on  the  grade  on  the  north 
bank  of  the  river  further  impeded  traffic.  The  North  Side  fashionable 
residential  area  was  further  hemmed  in  between  the  factories  and  the 
slums  along  the  north  branch  and  by  the  sands  along  the  lake  shore, 
which  at  times  were  the  habitat  of  a  disreputable  element.  In  view  of 
these  obstacles,  it  is  not  surprising  that  business  men  turned  for  their 
homesites  from  the  North  to  the  South  Side,  which  was  not  separated 
from  the  main  business  section  by  a  water  barrier  with  its  bridge  un- 
certainties. 

Wabash  and  Michigan  avenues  had  become  high-grade  residential 
streets  south  of  Monroe  in  the  forties  and  fifties.  The  southward  trend 
along  these  streets  to  Twelfth  and  Twenty-second  streets  was  hastened 
by  the  encroachment  of  business  in  the  downtown  area,  by  the  increase 
in  the  number  of  wealthy  men  seeking  homesites,  and  by  the  railroad 
and  street-car  transportation  that  made  the  more  distant  area  quickly 
accessible  to  the  main  business  section.  One  fine  home  on  Prairie  Ave- 
nue attracted  others,32  the  convenience  of  Illinois  Central  Railroad 
transportation  and  Cottage  Grove  Avenue  street  cars  drew  the  fash- 
ionable tide  eastward,  and  "the  avenues,"  Indiana,  Prairie,  Calumet, 
and  South  Park,  came  to  be  regarded  as  preferred  residential  locations. 
Sales  on  these  thoroughfares  near  Twenty-second  Street  that  had 
ranged  from  $20  to  $35  a  front  foot  in  1864,  from  $100  to  $150  a  foot  in 
1867,  and  from  $200  to  $500  a  foot  in  1871,  reached  their  apex  on 
Prairie  Avenue  near  Eighteenth  Street  where  both  Marshall  Field  and 
Philip  D.  Armour  had  their  homes  after  i873.33  At  this  time  South  Park 

3J  Parton,  op.  cit.,  pp.  335-36. 

32  Prairie  Avenue  near  Eighteenth  Street  had  acquired  prestige  since  1837  when  Henry 
Clarke  erected  a  $10,000  house  there,  which  long  stood  out  as  a  landmark  on  the  prairie, 
over  a  mile  from  any  other  house. 

33  Edwards'  City  Directory  (1873). 


94  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

Boulevard,  with  its  wooden-block  pavement  over  which  1,500  fine 
carriages  traveled  on  Sundays  to  the  new  parks,  had  a  higher  value 
($200  a  foot  to  $250  a  foot)  than  the  graveled  Michigan  Avenue. 
Farther  south,  east  of  South  Park  Avenue,  from  Thirty-first  to  Thirty- 
ninth  Street,  were  streets  like  Champlain,  Forest,  and  Langley,  or  the 
private  parks  like  Groveland,  or  Ellis  Avenue  where  residential  prop- 
erty commanded  $100  to  $150  a  front  foot  by  1873.  Still  farther  south 
was  fashionable  Kenwood  at  Forty- third  and  the  Illinois  Central  Rail- 
road that  had  spread  south  to  Forty-fifth  and  Greenwood  by  1873,  and 
contained  property  that  sold  from  at  $100  to  $150  a  front  foot  for  its 
deep  lots.  Hyde  Park,  from  its  center  at  Fifty- third  Street  and  Lake 
Park  Avenue,  was  also  spreading  northward  and  southward  and  ac- 
quiring a  reputation  as  a  fashionable  suburb.  The  avenues  near  Michi- 
gan Avenue  had  been  built  up  solidly  only  as  far  south  as  Twenty-sixth 
Street  by  the  latter  part  of  1871.  With  the  high-grade  character  of  the 
suburbs  to  the  southward  already  established,  and  with  the  new  belt 
of  parks  and  boulevards  lying  just  beyond,  the  future  growth  of  the 
avenues  had  already  been  projected  by  speculators  as  far  south  as 
Sixty-third  Street.  When  the  most  distant  land  in  the  belt  from  State 
Street  to  South  Park  Boulevard  was  held  at  from  $60  to  $100  a  front 
foot,  its  high  value  checked  the  encircling  movement  of  workers'  homes 
that  had  filled  the  land  north  and  west  of  Fifty-first  and  State  streets. 

The  West  Side  had  its  own  fashionable  avenues  for  its  merchants, 
lumber-dealers,  and  manufacturers.  The  territory  from  Lake  to  Van 
Buren  streets,  Halsted  to  Ashland  avenues,  was  served  by  a  complete 
network  of  sewers,  wooden-block  pavements,  on  most  of  the  east- 
west  streets  by  1871,  and  horse-car  lines  on  Randolph,  Lake,  Madison, 
Van  Buren,  and  Halsted  streets,  so  that  it  was  eligible  to  become  a 
select  neighborhood.  Its  lots  rose  in  value  from  $60  to  $80  a  front 
foot  in  1867  to  $150  and  $300  a  front  foot  in  1871,  with  Washington 
Boulevard  the  leading  east-west  residential  street.  Lots  near  Union 
Park,  at  Washington  and  Ashland  Avenue,  had  sold  for  $100  a  front 
foot  in  1856,  but  it  was  not  until  1864  that  Ashland  Boulevard  from 
Monroe  to  Harrison  Street  was  developed  by  Samuel  H.  Walker.  By 
widening  the  street,  platting  deep  lots,  planting  fine  shade  trees,  pro- 
viding sewers  and  pavement,  and  building  six  expensive  homes  on  six 
different  corners,  he  made  it  the  most  fashionable  street  on  the  West 
Side  by  1871."  From  1867  to  1871  the  value  of  the  best  Ashland  Ave- 

*  Chamberlin,  op.  cit,,  pp.  255-57;  Andreas,  op.  cit.t  II,  582. 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  95 

nue  lots  advanced  from  $50  a  foot  to  $450  a  foot.  As  on  the  South 
Side,  the  future  growth  of  the  West  Side  fashionable  area  was  projected 
westward  toward  the  new  Central  (now  Garfield  Park,  and  lots  near 
the  park,  although  then  far  removed  from  improvements,  sold  for  from 
$30  to  $50  a  foot. 

On  the  North  Side,  while  LaSalle,  Dearborn,  and  the  streets  east  of 
State  Street  failed  to  grow  as  fast  as  the  South  Side  avenues,  they  at 
least  maintained  their  aristocratic  character,  with  land  values  ranging 
from  $200  to  $300  a  front  foot,  and  they  secured  the  most  ample  public 
improvements  in  the  form  of  sewers,  water  mains,  and  wooden-block 
pavements. 

Altogether,  the  2,500  acres  of  land  within  the  city  limits  of  1871  that 
was  reserved  for  the  upper  sixth  or  less  of  the  325,000  in  the  city  had 
acquired  value  of  over  $100,000,000  while  the  amount  of  land  outside  the 
city  limits  that  speculators  hoped  would  be  occupied  by  the  upper  and 
middle  classes  exceeded  that  within  the  city  in  both  quantity  and  value. 

The  manufacturing  centers,  1863-71. — By  1871  the  railroad  arteries 
had  hardened  in  an  iron  network  around  the  downtown  area.  Along 
the  river  and  its  branches  in  the  downtown  area  were  seventeen  grain 
elevators  and  many  warehouses.35  The  McCormick  reaper  plant,  a 
$600,000  structure,  was  still  on  the  north  bank  of  the  main  channel  near 
the  harbor.  Tanneries,  distilleries,  flour  mills,  and  some  iron-boiler 
works  faced  the  north  branch  of  the  river ;  large  breweries  were  located 
on  the  north  side  near  the  waterworks.  On  the  near  West  Side,  from 
the  south  branch  to  Halsted  Street,  south  of  Kinzie  Street,  was  a  tract 
of  1 60  acres  devoted  to  steam-boiler  plants  and  iron-  and  wood-manu- 
facturing plants.  On  the  West  Side,  south  from  Van  Buren  along  the 
south  branch  of  the  river,  stretched  500  acres  of  lumber  yards  that  ex- 
tended to  Twenty-second  and  Ashland  Avenue.36  West  of  Twenty- 

35  These  seventeen  elevators  loaded  and  unloaded  wheat  by  steam  power.  The  facility 
with  which  the  grain  was  handled  as  compared  with  earlier  methods  is  thus  commented 
upon  by  James  Parton  in  1867:  "When  Chicago  exported  a  few  thousands  of  bushels  a 
year,  the  business  blocked  the  streets  and  filled  the  town  with  commotion,  but  now  that  it 
exports  50  or  60  million  bushels,  a  person  might  live  a  month  in  Chicago  without  being 
aware  that  there  was  anything  doing  in  grain"  (op.  cit.,  p.  331), 

In  the  grain  and  lumber  commerce  were  employed  77  steamers,  118  barges,  43  tugs,  33 
scows,  613  schooners,  or  a  total  of  904  vessels  of  218,215  tons,  manned  by  10,000  sailors. 

36  In  1867,  according  to  an  article  by  James  Parton  in  the  Atlantic  Monthly,  there  were 
614,000,000  board  feet  of  lumber  or  50,000,000  pine  boards  stored  in  the  miles  of  timber 
yards  along  the  forks  of  the  river.  "The  Harbor  is  choked  with  arriving  timber  vessels. 
Timber  trains  shoot  over  the  prairie  in  every  direction"  (ibid.,  p.  333). 


96  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

second  and  Ashland  Avenue  a  new  manufacturing  district,  the  south 
branch  district,  was  being  developed  with  fourteen  miles  of  docks  along 
the  river,  and  here  the  new  iron  industries  were  locating.  South  of  the 
canal  at  Thirty-ninth  and  Western  Avenue,  at  Brighton,  Adam  Smith 
had  a  chain  of  small  industries.  South  of  the  canal  at  Bridgeport,  east 
of  Thirty-first  and  Ashland  Avenue,  were  other  industries,  and  at  Thirty- 
ninth  and  Halsted  were  the  new  Stock  Yards  where  the  entire  meat- 
packing industry  was  concentrated.  Light  manufacturing  plants,  such 
as  clothing  and  cigar  factories,  tinsmiths,  carpenter  shops,  and  black- 
smith shops,  were  scattered  all  along  the  secondary  business  streets  on 
the  horse-car  routes  of  the  city.  There  were  other  outlying  centers  such 
as  the  Rock  Island  carshops  at  Forty-seventh  to  Fifty-first  on  Went- 
worth  Avenue;  the  carshops  at  Twenty-sixth  Street  and  the  Illinois 
Central  Railroad;  the  Wagon  Works  at  Holstein,  Fullerton,  and  West- 
ern avenues;  the  Watch  Factory  at  Cornell,  Seventy-fifth,  and  Ellis 
avenues,  and  the  new  industrial  center  that  was  being  prepared  at 
South  Chicago  by  the  building  of  a  harbor  at  Ninety-fifth  and  the  lake 
and  the  construction  of  docks  along  the  Calumet  River,  which  were 
all  pulling  workers  away  from  the  center  of  the  city.  The  lower  taxes 
and  the  cheaper  cost  of  land  away  from  the  downtown  area  were  also 
important  factors  in  the  location  of  new  industries.  Whereas  land  val- 
ues on  the  north  bank  of  the  main  channel  on  Kinzie  Street,  on  the  near 
West  Side  from  Halsted  Street  to  the  river,  ranged  from  $300  to  $400  a 
front  foot,  or  over  $75,000  an  acre,  in  the  new  south-branch  district  at 
Twenty-second  and  Ashland  Avenue,  land  with  dock  frontage  was  sold 
for  $12,500  an  acre,  and  in  the  Stock  Yards  lots  with  the  best  facilities 
were  sold  at  the  rate  of  $4,000  an  acre,  while  in  the  Calumet  region  land 
with  river,  lake,  and  rail  connections  was  offered  for  $1,000  an  acre. 
The  slums,  vice  areas,  and  workingmen's  quarters,  1863-71. — On  the 
North  Side,  west  of  Wells  Street,  on  the  West  Side,  north  of  Kinzie, 
south  of  Harrison  Street  and  west  of  Ashland  Avenue,  and  on  the 
South  Side  west  of  State  Street  there  were  in  1871  some  40,000  frame 
houses  of  an  average  value  of  $1,000  each  that  were  occupied  by  a 
population  of  over  200,000  persons.  The  rapid  increase  in  the  volume  of 
manufacturing  which  employed  60,000  workers  by  1873  had  quad- 
rupled the  population  of  the  West  Side  from  1862  to  1872  (57,000- 
214,000),  doubled  the  population  of  the  North  Side  from  1862  to  1870 
(35,000-70,000),  and  almost  doubled  the  population  of  the  South  Side 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  97 

from  1862  to  1872  (45, 500-88, 500)  ,37  The  majority  of  this  increased 
mass  of  people  were  workers  who  crowded  into  frame  cottages,  some 
built  on  both  the  front  and  the  rear  of  lots,  near  the  factories  along  the 
river,  on  streets  that  had  few  sewers  and  practically  no  pavements. 
The  most  densely  populated  district  was  that  section  on  the  West  Side 
between  the  south  branch  of  the  river,  Halsted,  Harrison,  and  Twenty- 
second  streets,  and  one  of  the  worst  spots  in  this  area,  Maxwell  Street 
near  Halsted  Street,  is  thus  described  by  a  current  observer. 

The  street  may  be  singled  out  of  a  thousand  by  the  peculiar,  intensive  stench 
that  arises  from  pools  of  thick  and  inky  compound  which  in  many  cases  is  several 
feet  deep  and  occasionally  expands  to  the  width  of  a  small  lake.  Almost  at  every 
step  a  dead  dog,  cat  or  rat  may  be  seen.  These  unusually  sagacious  animals  had 
mistaken  this  for  a  respectable  street  because  it  is  very  broad  and  tried  to  pass 
through,  but  with  their  lives  had  to  pay  for  their  recklessness  and  foolhardiness. 
The  poor  creatures  undoubtedly  died  of  asphyxiation. 38 

The  vice  area  was  then  in  that  part  of  the  downtown  section  that 
lies  south  of  Washington  Street  and  runs  west  of  LaSalle  Street  to  the 
south  branch  of  the  river,  with  the  center  of  corruption  in  the  notorious 
Conley's  patch  at  Wells  and  Monroe  streets.  The  negro  population  of 
the  city  lived  chiefly  in  the  section  west  of  State  Street  just  south  of 
Harrison  Street  until  the  fire  of  1874^  forced  their  removal,  whereupon 
they  established  themselves  west  of  State  Street  between  Twenty- 
second  and  Thirty-first  streets. 

The  Irish  had  a  stronghold  at  Bridgeport,  the  Swedes  and  Norwer 
gians  were  thickly  settled  west  of  Wells  near  Chicago  Avenue,  and  the 
Germans  west  of  Wells  near  North  Avenue.  Other  families  in  the  lower- 
income  groups  lived  over  stores  in  the  downtown  area  or  along  the 
secondary  business  streets.  A  class  midway  between  the  leaders  of 
society  on  the  avenues  and  the  laboring  poor  next  to  the  factories  and 
the  river  lived  just  west  of  State  Street  to  the  Rock  Island  tracks 
south  of  Twenty-second  Street,  in  the  section  bordering  the  fashionable 
North  Side  streets  on  the  west,  or  on  the  Northwest  Side  along  Mil- 
waukee Avenue.  The  best  of  this  medium  range  of  property  was  worth 
$60  a  front  foot,  and  the  poorest  $20  a  front  foot,  though  some  com- 
manding the  higher  price  was  in  the  worst  slum  districts,  but  had  ac- 
quired its  value  because  of  its  proximity  to  the  main  business  section. 

37  Chamberlin,  op.  cit.,  p.  279. 

38  Chicago  Tribune,  June  19,  1873. 

39  This  fire  of  1874  is  not  to  be  confused  with  the  great  fire  of  October  9,  1871. 


98  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

The  land  occupied  by  nearly  250,000  persons  in  Chicago  in  1871  did  not 
have  a  value  of  over  $50,000,000,  while  the  fashionable  territory  occu- 
pied by  less  than  100,000  had  a  value  over  twice  that  amount.  Not 
mere  dense  population  alone,  but  a  population  with  a  high  income 
gave  residential  land  its  highest  value. 

The  secondary  business  streets. — Chicago  grew  fastest  along  the  prin- 
cipal streets  that  had  the  best  pavements  and  the  street-car  lines.  In 
the  period  following  the  Civil  War  these  horse-car  routes,  which  in  turn 
had  followed  the  main  omnibus  routes  and  heavily  traveled  thorough- 
fares, began  to  develop  into  important  business  streets.  The  man 
who  was  ridiculed  for  building  stores  at  Twenty-second  Street  and 
Michigan  in  1868  reaped  a  net  annual  return  of  from  10  to  15  per  cent 
on  his  pioneer  venture,  and  by  1871  there  had  been  a  rush  of  business 
firms  towards  these  arteries  of  traffic.  West  Madison  Street  near  Hal- 
sted  Street  became  worth  $600  a  front  foot  by  1873,  and  the  corner  of 
Madison  and  Halsted  was  sold  for  $1,500  a  front  foot  at  the  same  time, 
not  far  below  the  value  of  the  best  corners  in  the  downtown  area. 
Halsted  Street  from  Milwaukee  Avenue  to  Harrison  Street  also  reached 
front-foot  values  as  high  as  $500.  North  Clark  Street  frontage  sold  for 
$1,000  a  foot  just  north  of  the  main  channel;  it  was  worth  $500  a  foot 
at  Chicago  Avenue  and  $250  a  foot  north  of  Division  Street.  Milwau- 
kee Avenue  was  the  main  axis  of  the  northwest  section  in  which  25,000 
people  lived  in  1871,  and  had  a  value  of  from  $100  to  $200  a  foot 
as  far  north  as  Division  Street.  State  Street,  south  of  Harrison  to 
Thirty-ninth  Street,  ranged  in  value  from  $500  down  to  $100  a  front 
foot,  passing  first  through  a  belt  thick  with  saloons  and  immoral  re- 
sorts, and  then  entering  a  more  respectable  territory  south  of  Twenty- 
second  Street.  Cottage  Grove  Avenue,  also  studded  with  saloons, 
reached  values  of  from  $100  to  $150  a  foot,  from  Twenty-second  to 
Thirty-ninth  streets.  Lots  on  Archer  Avenue,  from  State  to  Ashland 
Avenue,  sold  from  $60  to  $200  a  foot;  Blue  Island  Avenue  lots  from 
Harrison  to  Roosevelt  Road  ranged  from  $60  to  $100  a  foot;  Twelfth 
Street  (now  Roosevelt  Road)  lots  sold  for  from  $150  to  $200  a  foot 
near  Halsted  down  to  $50  a  foot  near  Kedzie  Avenue;  and  Chicago 
Avenue  east  of  the  north  branch  ranged  from  $150  to  $300  a  foot. 
Wentworth  Avenue  was  the  leading  South  Side  business  street  west  of 
State  Street,  with  its  lots  selling  for  from  $60  to  $100  a  foot,  from 
Twenty-second  to  Thirty-first  Street.  North  Wells  Street  was  an  in- 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  99 

ferior  North  Side  shopping  street,  supported  by  the  workers  living 
west  of  it. 

The  parks,  1865-71. — The  establishment  of  the  outer  belt  of  parks 
and  boulevards  in  Chicago  in  1869  was  one  of  the  main  factors  in  the 
rapid  rise  in  land  values  just  beyond  the  settled  area  of  the  city  in  this 
period.  Prior  to  1866,  besides  several  small  parks  of  a  few  acres  each, 
the  city  had  only  the  fifteen-acre  Union  Park,  acquired  in  1854,  and  the 
part  of  the  present  Lincoln  Park  that  was  converted  from  a  cemetery 
in  1865.  After  the  Civil  War  the  fame  of  Haussman's  park  and  boule- 
vard system  in  Paris  reached  the  city  that  was  seeking  new  outlets  for 
fashionable  expenditure,  and  the  reports  of  the  rapid  rise  of  land  values 
in  the  vicinity  of  Central  Park  in  New  York  fired  the  imagination  of 
real  estate  operators.  Paul  Cornell  conceived  the  project  of  a  large 
park  on  the  South  Side  to  be  paid  for  by  special  assessments,  and  in 
February,  1867,  he  and  his  associates  secured  the  passage  of  a  bill  (to 
become  a  law  on  the  approval  of  the  voters)  authorizing  the  establish- 
ment of  a  South  Park  Board  and  the  purchase  of  a  park  site  to  be  lo- 
cated north  of  Thirty-fifth  Street,  east  of  Michigan  Avenue,  and  west 
of  Cottage  Grove  Avenue,  the  purchase  to  be  made  by  the  issuance  of 
bonds  which  were  ultimately  to  be  retired  by  special  assessments  on  the 
district  benefited.40  This  bill  was  defeated  by  the  voters  in  April,  1867, 
but  the  sponsors  of  the  first  bill  renewed  their  efforts  at  the  next  session 
of  the  legislature  and  procured  the  passage  of  a  second  bill  on  February 
24,  1869,  which  definitely  fixed  the  boundaries  of  the  South  Side  parks 
and  boulevards  as  they  exist  today  in  the  present  limits  of  Washington 
and  Jackson  parks,  the  Midway  and  Drexel,  Grand  and  Garfield 
boulevards,  and  authorized  a  bond  issue  of  two  million  dollars  to  pur- 
chase the  area  thus  marked  out.41  This  bill  met  the  approval  of  the 
voters  and  became  a  law  in  March,  i869.42  Almost  simultaneously  with 
the  passage  of  the  South  Park  bill,  a  bill  providing  for  the  West  Park 
Board  and  the  three  West  Side  parks — Humboldt,  Garfield,  and 
Douglas  parks — was  passed  by  the  legislature  and  approved  by  the 
voters,43  and  still  another  bill  provided44  for  the  northward  extension  of 
Lincoln  Park. 

40  Private  Laws  of  Illinois  (25th  General  Assembly;  Springfield,  1867),  II,  472-78. 

41  Laws  of  Illinois  (26th  General  Assembly;  Springfield,  1869),  I,  358-66. 
*a  Chambelrlin,  op.  cit.,  p.  314. 

«  Laws  of  Illinois  (26th  General  Assembly;  Springfield,  1869),  I,  342-43. 
*  Chamberlin,  op.  cit.j  pp.  337-39. 


ioo  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

The  South  and  West  Park  commissioners  sold  their  bonds  and,  dur- 
ing 1869  and  1870,  bought  the  1,100  acres  for  the  south  parks  and  the 
600  acres  for  the  west  parks.  The  effect  of  the  purchase  of  this  land, 
which  had  hitherto  lain  dormant  a  mile  beyond  the  built-up  area  of  the 
city,  was  to  start  a  furious  speculation  in  the  land  facing  the  parks  or 
in  the  vicinity  of  the  parks,  which  reached  a  high  pitch  of  intensity, 
particularly  near  the  south  parks,  just  before  the  great  fire  of  1871. 
Since  the  movement  was  resumed  afterward,  the  account  of  this  rise  in 
value  of  lands  near  the  parks  will  be  deferred  until  after  the  account  of 
the  fire.45 

The  suburbs. — The  suburban  movement,  which  did  not  reach  its 
culmination  during  this  period  until  after  the  fire,  also  began  to  gain 
rapid  momentum  after  1868.  The  suburbs  along  the  railroads  had 
barely  started  in  1856  when  the  panic  of  1857  and  the  Civil  War  had 
stopped  speculation  in  suburban  lands.  In  1866  there  were  only  a  few 
houses  in  Englewood,  notwithstanding  three  railroad  lines.  Observers 
could  see  only  ten  houses  between  the  Englewood  Depot  and  the  lake. 
Shortly  afterward  both  Hyde  Park  and  Englewood  began  to  grow 
rapidly,46  and  in  1868  and  1869  new  subdivisions  were  opened  near 
Hyde  Park,  Englewood,  and,  on  the  northwest  side,  at  Irving  Park  and 
Jefferson  along  the  North  Western  Railroad.47 

The  spread  of  the  speculative  land  movement,  1868-1871. — Thus  the 
rise  in  land  values  which  began  in  1863  in  the  downtown  business 
area  and  in  the  residential  streets  near  the  horse-car  lines,  where  it  had 
increased  very  rapidly  during  1868  and  1869  and  then  had  begun  to 
slow  down;  spread,  after  1869,  to  land  beyond  the  settled  area  and  to 
the  suburban  lands  along  the  railroads.  The  so-called  public  participa- 
tion in  land-buying  began  about  1868  when  many  cases  of  large  profits 
made  in  real  estate  since  1861  had  become  common  knowledge,  and  in 

45  See  pp.  ooo  ff . 

^  Real  Estate  and  Building  Journal,  August  19,  1871:  "As  far  south  as  Calumet  and 
Lake  townships  but  a  few  years  ago  was  one  complete  swamp,  having  no  particular  use  but 

for  hunting  and  fishing If  building  continues  at  the  same  rate,  the  whole  section 

south  of  the  city  limits  to  Englewood  will  be  one  dense  mass  of  houses." 

47  Ibid.,  May  20, 1871 :  "At  Irving  Park,  at  Maplewood,  and  at  points  between  the  latter 
and  Irving  Park,  men  are  busy  planting  trees  and  shrubbery,  laying  walks,  digging  artesian 
wells  and  building  houses  which  as  a  whole  will  compare  favorably  with  those  in  any  town 
of  the  United  States.  When  two  years  ago  there  was  not  a  house,  a  tree,  a  sidewalk,  or  even 
a  surveyed  street,  there  are  today  as  handsome  villages  as  can  be  found  elsewhere  in  the 
land,  numbering  each  from  20  to  50  as  pretty  villas  as  we  ever  saw." 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  101 

1871  one  writer  reports  that  every  other  man  and  every  fourth  woman 
in  Chicago  had  an  investment  in  lots.  Before  the  rise  in  this  outlying 
lands  had  reached  its  culmination,  however,  it  was  at  first  interrupted 
and  then  stimulated  by  the  great  fire  October  9,  1871. 

D.   THE  GREAT  FIRE  OF  1871  AND  THE  PERIOD 
BEFORE  THE  PANIC  OF  1873 

The  great  fire  of  October  9,  1871. — It  needed  but  a  flame  from  an 
overturned  lamp  when  a  southwest  wind  was  blowing  with  the  force  of 
a  hurricane  over  an  area  of  pine  shacks  and  lumber  yards  that  were 
parched  from  lack  of  appreciable  rainfall  for  six  weeks  to  start  one  of 
the  greatest  holocausts  in  history.  The  fire  started  on  the  West  Side 
near  Twelfth  and  Dekoven  streets,  but  it  did  small  damage  there,  and 
under  ordinary  conditions  it  would  soon  have  burned  itself  out  when  it 
reached  the  river  and  an  area  that  had  been  cleared  by  a  fire  of  the  night 
before.  The  extraordinary  gale,  however,  swept  sparks  across  the  river 
at  Harrison  Street,  where  they  rapidly  started  a  blaze  in  the  densely 
packed  hovels  of  that  region  and,  gaining  a  fresh  start,  soon  generated 
an  intense  furnace  heat  that,  sweeping  in  many  columns  on  the  main 
business  district,  melted  down  single  five-story  brick  and  stone  build- 
ings in  five  minutes  and  completely  destroyed  the  principal  business 
blocks,  hotels,  depots,  theaters,  banks,  newspaper  offices,  and  govern- 
ment buildings  of  the  city.  Then  in  the  early  morning  of  the  next  day 
the  flames  leaped  the  main  channel  of  the  river  and  carried  destruction 
to  the  North  Side,  whose  factories  and  beautiful  residences  were  all 
in  ashes  before  nightfall.  Before  the  fire  burnt  itself  out  in  the  coffins  of 
Lincoln  Park,  it  had  swept  over  2,100  acres,  destroyed  17,450  of  the 
60,000  buildings  in  the  city,  including  all  of  the  most  valuable,  ren- 
dered 104,500  persons  or  one-third  of  the  population  homeless,  and 
caused  a  total  loss  in  buildings,  personal  property,  and  merchandise  of 
nearly  $2oo,ooo,ooo.48  The  loss  had  fallen  mainly  on  the  central  busi- 
ness district  and  the  North  Side,  the  West  Side  and  the  new  residential 
sections  on  the  South  Side  being  left  almost  intact.  Nevertheless  it  was 
such  a  blow  that  many  of  Chicago's  commercial  rivals  hoped  that  it 
would  permanently  halt  the  industrial  and  commercial  progress  of  the 
city  whose  growth  had  amazed  the  world.  Some  of  its  own  citizens  ex- 
pected that  the  obliteration  of  the  downtown  buildings  would  result  in 

i8  Colbert  and  Chamberlin,  op.  cit.,  pp.  285-87,  301. 


102  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

the  shift  of  the  main  business  center  to  a  new  location.  The  railroad 
bands  of  iron  and  steel  and  the  trade  connections  of  Chicago,  however, 
were  too  thoroughly  established  to  permit  the  happening  of  either  of 
these  events.  The  fire,  nevertheless,  had  a  permanent  effect  on  the 
growth  of  the  city,  although  many  of  its  influences  accentuated  rather 
than  reversed  the  trends  already  in  evidence  before  the  fire. 

Most  of  the  104,500  persons  made  homeless  by  the  fire  who  did  not 
leave  the  city  found  refuge  on  the  West  Side,  whose  population  in- 
creased from  160,000  in  1871  to  214,000  in  October,  1872,  with  the 
greatest  increases  taking  place  on  the  outer  edge  of  the  built-up  area. 
Temporarily,  West  Madison  Street  was  the  most  important  business 
thoroughfare  in  the  city,  and  land  values  of  the  near  West  Side  reached 
a  peak  immediately  after  the  fire  that  was  not  exceeded  for  many  years 
thereafter.  At  the  same  time  the  value  of  lots  on  Wabash  Avenue 
south  of  Harrison  Street  increased  as  ten  bankers  and  the  heads  of 
thirty  or  forty  other  business  firms  opened  offices  in  their  residences. 
Marshall  Field  opened  a  store  at  Twentieth  and  State  streets  as  well  as 
one  on  the  West  Side.  The  fire  ended  the  residential  occupancy  of  the 
downtown  area,  where  27,800  persons  had  lived  before;  for  the  shacks 
in  the  southwest  portion  of  it  were  not  rebuilt,  because  of  the  change 
to  a  higher  use.  The  building  of  temporary  business  offices  in  the 
park  along  the  east  side  of  Michigan  Avenue  so  changed  the  appear- 
ance of  that  once  fashionable  street  that  the  former  residents  sought 
new  quarters  in  the  fashionable  avenues  to  the  south. 

Meanwhile,  land  values  in  the  burnt  area  in  the  main  business  dis- 
trict and  on  the  North  Side  had  declined  about  30  per  cent,  on  the 
average,49  because  of  the  uncertainty  as  to  the  future  of  this  land.  The 
owners  of  the  lots  bordering  the  smoking  ruins  on  the  south  and  west 
were  endeavoring,  by  planning  new  buildings  for  its  occupancy,  to 
hold  permanently  the  business  that  had  been  thrust  upon  them.  The 
landowners  in  the  downtown  area,  however,  hardly  waited  for  the 
bricks  to  cool  before  measuring  the  foundations  of  the  ruins  for  new 
buildings  that  were  to  be  more  magnificent  than  the  old.  In  a  year  of 
hectic  building  in  which  borrowed  money  from  the  East,  lavishly  sup- 
plied, enabled  Chicago  lot-owners  to  spend  over  $40,000,000  for  new 
construction,  most  of  which  was  in  the  downtown  area  alone,50  the 
retail  and  financial  interests  of  Chicago  were  drawn  back  to  the  same 

« Ibid.,  p.  302.  so  Chicago  Tribune,  October  9,  1872. 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  103 

locations  in  which,  they  had  established  themselves  shortly  before  the 
fire.  State  Street,  from  Washington  to  Monroe,  as  reconstructed,  was 
heralded  as  the  finest  retail  section  in  America.  Washington  Street,  near 
LaSalle  Street,  had  attracted  to  it  seventeen  of  the  national  banks. 

The  land  values  in  the  south  end  of  the  central  business  district  fully 
recovered  their  ante-fire  levels.  Meanwhile,  Wabash  Avenue,  south  of 
Harrison  to  Twenty-second  Street,  was  deserted  by  the  banks  and 
business.  Its  career  as  a  fashionable  residential  street  was  ruined  by  the 
temporary  influx  of  business,  and  it  assumed  a  mixed  business  and 
residential  character  as  its  old  mansions  were  given  over  to  boarding- 
houses.  Its  rents  declined  30  per  cent  during  1872.  Thus  the  first 
tendency  of  values  in  the  burnt  area  to  decline,  and  that  of  land  values 
on  the  edge  of  the  burnt  area  to  advance,  was  reversed  in  less  than  a 
year  after  the  fire.  The  retail  and  financial  interests  were  more  firmly 
intrenched  than  ever  in  the  positions  they  had  assumed  after  the  shift 
from  Lake  Street. 

There  were  other  lasting  effects  of  the  fire,  however,  in  addition  to 
those  already  noted.  The  fashionable  North  Side,  while  largely  rebuilt 
within  a  year  after  the  fire,  had  received  a  setback  from  which  it  did 
not  .soon  recover,  and  the  already  pronounced  drift  to  the  South  Side 
avenues  received  additional  impetus.  The  very  competition  in  building 
between  the  business  section  in  the  burnt  area  and  that  on  the  edge  of 
it  had  produced  a  surplus  of  large  stores  with  a  consequent  decline  in 
rents  in  most  locations  except  on  State  Street,  Madison,  Washington, 
and  LaSalle  streets  near  the  centers  of  retail  trade  and  finance.  The 
destruction  of  the  shanties  of  the  old  vice  area  south  of  Washington 
Street  to  Harrison  Street  and  west  of  Wells  Street  to  the  river  had 
forced  a  concentration  of  the  immoral  houses  into  the  old  territory  un- 
touched by  the  fire  that  lay  south  of  Harrison  Street,  west  of  State 
Street.  The  area  purified  by  the  fire  along  Wells,  Franklin,  and  Monroe 
streets  was  taken  over  as  a  new  center  for  wholesale  trade,  for  lots  there 
could  be  bought  for  $500  a  front  foot  as  compared  with  $1,000  a  front 
foot  or  more  demanded  on  Lake,  Randolph,  and  Wabash  Avenue.  A 
further  effect  of  the  fire  was  to  hasten  other  tendencies  that  were  in 
progress  before,  for  when  their  buildings  were  destroyed,  part  of  the 
inertia  that  held  their  occupants  to  old  locations,  despite  the  superior 
advantages  of  a  new  site,  was  likewise  destroyed.  McCormick  did  not 
rebuild  his  reaper  plant  on  the  expensive  ground  along  the  north  side 


104  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

of  the  main  channel  of  the  Chicago  River,  but  in  the  new  south- 
branch  manufacturing  district  near  Twenty-second  and  Western 
avenue.  The  last  of  the  banks  and  retail  establishments  left  Lake 
Street  to  occupy  new  quarters  near  the  new  centers  of  trade  and 
finance.  Thus  within  a  year  after  the  fire,  the  downtown  area  had  been 
reconstructed  with  new  brick  and  stone  buildings  that  were  predomi- 
nantly four  and  five  stories  high,  with  three  seven-story  and  six  eight- 
story  buildings  looming  slightly  above  the  rest.51  In  the  enthusiasm  of 
the  rebuilding  and  the  triumphant  emergence  of  a  new  city  from  the 
ashes  of  the  old,  the  fire  had  almost  seemed  a  blessing.  While  the 
boom  lasted,  it  was  forgotten  that  the  new  buildings  had  been  erected 
at  very  high  costs  on  borrowed  money  bearing  interest  at  the  rate  of 
8  per  cent  per  annum  that  would  fall  due  five  years  in  the  future.  The 
outward  magnificence  of  the  buildings  did  not  disclose  the  fact  that 
they  were  nearly  all  covered  with  mortgages. 

The  fire  had  also  another  very  important  effect  in  that  it  accelerated 
the  building  of  a  belt  of  workingmen's  cottages  in  a  semicircle  around 
the  outskirts  of  the  city.  An  ordinance,  enacted  after  the  fire,  had  pro- 
hibited the  erection  of  wooden  buildings  near  the  center  of  the  city.52 
As  the  workers  could  afford  to  live  in  no  other  kind  and  also  found  that 
new  carshops,  such  as  those  of  the  North  Western  Railroad  near  Craw- 
ford and  Kinzie  street,  the  iron  works,  the  Stock  Yards,  and  the  new 
McCormick  plant,  were  all  being  located  on  the  edge  of  the  built-up 
area,  they  began  to  seek  homesites  outside  of  the  fire  limits.  The  gen- 
eral industrial  prosperity  and  the  rush  of  reconstruction  which  had 
raised  the  wages  of  skilled  mechanics  to  five  dollars  and  as  high  as  ten 
dollars  a  day  had  given  the  workers  means  to  buy  lots  for  homes  and 
for  speculation.  Moreover,  the  passion  to  own  land  that  seemed  to  be 
the  very  basis  of  independence  to  immigrants  who  had  been  oppressed 
by  the  landlords  of  Europe  had  given  them  the  desire  to  invest  in  land. 
This  encircling  belt  of  frame  houses  that  grew  rapidly  during  1872 
started  on  the  North  Side  at  Fullerton  Avenue  west  of  Lincoln  Avenue, 
and  stretched  southward  to  North  Avenue  and  westward  to  the  north 
branch.  Beginning  again  west  of  Milwaukee  Avenue,  it  filled  in  the 
space  as  far  west  as  Western  Avenue  and  as  far  south  as  Kinzie  Street ; 
then,  after  a  break,  it  covered  the  territory  from  Madison  Avenue  to 
Ogden  Avenue  east  of  Western  Avenue  to  Roosevelt  Road.  Com- 

51  Ibid.  53  See  map  of  fire  limits  in  1873  in  Fig.  17. 


MAP  OF  CHICAGO 

-  SHOWING  - 


THE  BURNED  AREA-I87I 

AND 
FIRE  LIMITS- 1872 


CORPORATE  LIMITS  OF  CHICAGO 


FIG.  17 


MAP  OF  CHICAGO 

-  SHOWING - 


EXTENT  OF  SETTLED  AREA 

FOR  THE  PERIODS 
1834, 1844. 1857  AND  1873 


^H  EXTENT  OF  SETTLED  AREA  IN  1634 
HH  GROWTH  OF  SETTLED  AREA  FROM  1834- «44 
§^j  GROWTH  OF  SETTLED  AREA  FROM  1844-1857 
iHU  GROWTH  OF  SETTLED  AREA  FROM  1657-1873 


NOTE:BA3E  MAP  SHOWS  PRESENT  CITY  STRUCTURE 


PREPARED  BY  HOMER  HOYT 


FIG.  1 8 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  107 

meriting  again  south  of  the  Chicago,  Burlington  and  Quincy  tracks  at 
Sixteenth  Street,  it  proceeded  south  to  Blue  Island  Avenue  and  to 
Twenty-sixth  and  California  Avenue  past  the  McCormick  reaper 
plant.  Crossing  the  Illinois  and  Michigan  Canal,  it  began  again  at 
Brighton,  Thirty- third  and  Western  Avenue,  where  a  number  of  enter- 
prises were  conducted  by  Adam  Smith.  Finally,  it  swung  around  the 
Stock  Yards  to  the  Rock  Island  carshops  at  Fifty-first  and  Wentworth 
Avenue,  until  it  came  to  an  end  at  State  Street.53  In  addition  to  this 
belt,  seven  miles  long  and  one  mile  broad,  that  adjoined  the  solid 
growth  of  the  city,  there  were  streamers  of  a  straggling  growth  of  frame 
cottages  radiating  from  Englewood  along  the  railroads,  northward  to- 
ward Fifty-fifth  Street,  southwestward  toward  South  Englewood  and 
Washington  Heights,  and  southeastward  toward  Grand  Crossing  and 
South  Chicago. 

The  great  fire  temporarily  checked  but  did  not  stop  suburban  devel- 
opment. In  1872  and  the  early  part  of  1873  this  movement  raged  with 
greater  fervor  than  ever.  The  fire  hazard  and  the  prohibition  of  wooden 
structures  inside  the  fire  limits  were  now  added  reasons  for  leaving  the 
close  confines  of  the  city.  Therefore,  the  rise  in  the  value  of  outlying 
lands  near  Chicago  will  be  discussed  as  one  continuous  movement  that 
lasted  from  1865  to  1873. 

Increase  in  the  value  of  outlying  lands,  1865-73. — The  period  from 
1865  to  1873  witnessed  a  remarkable  increase  in  the  value  of  all  the 
land  lying  from  three  to  eight  miles  from  the  center  of  the  city.  On  the 
fashionable  avenues  south  of  the  built-up  areas  on  the  South  Side,  there 
were  such  gains  from  1866  to  1873  as  from  $500  to  $10,000  an  acre  at 
Forty-seventh  and  State  streets,54  and  from  $1,000  to  $20,000  an  acre 
at  Fifty-first  and  Drexel  Boulevard,  while  some  land  near  the  village  of 
Hyde  Park  is  reported  to  have  increased  from  $100  to  $15,000  an 
acre  from  1865  to  i873.55  Gains  almost  as  great  were  reported  near  the 
West  Side  parks,  as  land  near  Garfield  (then  Central)  Park  sold  for 
$275  an  acre  in  1867  and  $4,000  an  acre  in  1873  ;56  near  Douglas  Park 
there  was  a  rise  in  land  values  of  from  $500  to  $3,500  an  acre  in  the  same 
interval,57  and  near  Humboldt  Park  the  gain  was  from  $250  to  $5,000 

53  Chicago  Tribune,  May  18,  1873. 

»  Chamberlin,  op.  cit.,  p.  309.  &  Ibid.,  p.  353. 

s6  Chicago  Title  and  Trust  Company  Abstracts,  Vol.  5391,  p.  638. 


io8  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

an  acre  from  1869  to  i873.s8  North  of  Lincoln  Park,  from  Belmont  to 
Fullerton,  land  values  tripled  from  1868  to  1872,  with  lots  on  Welling- 
ton and  Barry  avenues  near  the  lake  selling  for  $125  a  front  foot.59 

The  rapid  rate  of  increase  was  not  confined  to  the  fashionable  sec- 
tions. Land  west  of  State  Street,  near  Thirty-fifth  Street,  rose  from 
$1,000  to  nearly  $15,000  an  acre,  and  in  the  Stock  Yards,  at  Thirty- 
ninth  and  Halsted  streets,  sales  per  acre  registered  increases  thus: 
$70  in  1863,  $250  in  1864,  $1,000  in  1868,  and  $4,000  in  i872.6° 

The  growth  of  the  young  suburban  towns  and  the  birth  of  new  ones 
were  followed  by  the  dazzling  transformation  of  farms  that  sold  for 
$25  to  $100  an  acre  into  staked  and  platted  town  lots  that  brought  $400 
to  $1,000  apiece,  although  their  outward  appearance  changed  but 
little.  Excursion  trains  carried  a  thousand  people  to  auction  sales  of 
lots  at  which  sales  of  $500,000  were  made  in  a  single  day.  At  Cornell, 
or  Grand  Crossing,  Mr.  Cornell  bought  land  for  $25  an  acre  in  1865  and 
sold  it  at  $300  a  lot,  or  $3,000  an  acre,  in  1873.  After  Hyde  Park  and 
Englewood  had  reported  gains  in  land  values  ranging  from  1,000  to 
15,000  per  cent  in  five  or  six  years,  the  speculative  fever  spread  to  more 
distant  suburbs.  Washington  Heights,  along  the  Rock  Island  Rail- 
road, from  Eighty-seventh  to  One  Hundred  and  Nineteenth  streets, 
because  of  its  suburban  railroad  service  and  a  proposed  branch  line  that 
was  to  connect  it  with  the  industrial  section  at  South  Chicago,  became 
the  scene  of  intense  activity  in  the  first  six  months  of  1873,  when  sales 
to  the  amount  of  $2,000,000  were  made.  The  advance  in  the  sales  price 
per  acre  of  one  tract  near  Ninety-fifth  and  Ashland  Avenue  is  thus  re- 
corded: $50,  $68,  and  $100  in  1868;  $150  and  $250,  in  1869;  $400  in 
1871;  $1,000,  $1,375,  and  $1,500  in  1873,  as  the  brokers  received  over 
$11,000  in  commissions  in  turning  over  one  forty-acre  tract.61  The 
Blue  Island  Land  Company  which  started  this  ball  rolling  on  a  cash 
outlay  of  $35,000  had  apparent  profits  of  nearly  $1,000,000  in  1873.  In 
South  Chicago,  the  Calumet  Canal  and  Dock  Company  had  acquired 
six  thousand  acres  of  land  on  the  Lake  and  Calumet  River  at  the  price 
of  $1.25  to  $100  an  acre,  had  secured  a  government  appropriation  of 
$50,000  for  a  harbor,  had  built  docks,  secured  railway  connections,  and 
platted  a  new  town  on  the  site  of  the  old  subdivisions  of  Calumet  and 

s«  Chamberlin,  op,  tit.,  p.  335.  59  ibid.,  p.  349. 

60  Chicago  Title  and  Trust  Company  Abstracts,  Vol.  1830,  pp.  522-38. 

61  Chamberlin,  op.  tit.,  p.  223. 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  109 

George  that  had  been  abandoned  after  1836.  In  1874  their  holdings 
were  appraised  at  $5,700,000  or  nearly  $1,000  an  acre,  and  lots  were 
being  sold  to  workers  not  only  in  the  close  vicinity  of  Calumet  Harbor, 
but  also  in  the  hitherto  neglected  swamps  near  Lake  Calumet  and  in 
distant  Riverdale  at  One  Hundred  and  Thirty-eighth  and  Indiana  Ave- 
nue. 

West  of  the  downtown  area  along  the  Galena  division  of  the  North 
Western  Railroad,  attracted  by  the  land  operations  of  a  syndicate  that 
had  bought  land  for  the  new  carshops  west  of  Crawford  Avenue,  by  the 
West  Side  parks,  and  by  the  widely  heralded  advantages  of  suburban 
life  along  the  railroads,  was  another  line  of  new  subdivisions  that  ex- 
tended far  beyond  the  western  limits  of  the  city.  Northwestward  along 
the  original  line  of  the  Chicago  and  North  Western  Railroad  land  worth 
less  than  $100  an  acre  in  1865  was  selling  at  Irving  Park,  Jefferson,  and 
Norwood  Park  at  from  $1,000  to  $3,000  an  acre  in  lots.  Due  north 
along  the  Chicago  and  Milwaukee  Railroad  were  the  subdivisions 
at  Ravenswood  and  Rogers  Park  in  the  present  city  limits  and  a  line 
of  new  or  rapidly  growing  suburban  towns  from  Evanston  and  Wil- 
mette  to  Lake  Forest  and  Waukegan. 

As  speculative  activities  thus  extended  far  along  the  railroad  lines, 
the  spaces  in  between  that  were  within  twelve  miles  of  the  center  of  the 
city  were  not  neglected.  That  distant  belt  of  land  from  Fifty-fifth  to 
Eighty-seventh  Street,  Kedzie  to  Cicero  Avenue,  that  is  still  to  a  large 
extent  vacant  because  of  the  projected  Chicago,  Danville  and  Vin- 
cennes  Railroad  along  the  line  of  Central  Park  Avenue,  rose  in  value 
from  $50  an  acre  in  1868  to  $500  and  $1,000  an  acre  in  1873. 

The  population  of  Chicago  had  grown  rapidly  from  1860  to  1873,  and 
it  had  spread  out  until  in  1870  the  population  living  from  three  to  five 
miles  from  the  center  of  the  city  numbered  55,000  as  compared  with 
8,000  in  1860.  By  1873  the  population  in  this  outer  belt  had  increased 
to  nearly  100,000.  The  increase  in  the  number  of  inhabitants  could  not, 
however,  keep  pace  with  the  increase  in  the  number  of  lots  that  were 
subdivided  and  offered  for  sale  in  this  period.  Within  the  1873  corporate 
limits  of  Chicago  were  104,411  lots,  of  which  probably  over  half  were 
occupied  in  1873,  and  in  Cook  County  outside  of  Chicago  were  120,301 
more  lots,  nearly  all  of  which  were  vacant.  Enough  lots  had  been  sub- 
divided from  1868  to  1873  to  provide  for  a  total  of  over  1,000,000  people 
when  the  population  of  the  Chicago  area  was  still  less  than  400,000  in 


MAP  OF  CHICAGO 

-SHOWING  - 


ORIGINAL  SUBDIVISIONS 
1863  TO  1879 


LEGEND  FOR  DATA 

AREAS  SUBDIVIDED  BEFORE   1363 
AREAS  SUBDIVIDED  FROM  1863  TO  1866 
AREAS  SUBDIVIDED  FROM  1867  TO  1874 


|"       1    AREAS  SUBDIVIDED  INTO  5  AND  10  ACRE 
fc»»»-»         TRACTS  FROM  1867  TO  1874 

|j|il:j||    AREAS  SUBDIVIDED  FROM  1875  TO  1879 


iitll      I      I 


FIG.  19 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  in 

i873.62  The  extent  of  the  growth  of  the  straggling  suburbs  with  their 
scattered  houses  is  not  to  be  overemphasized.  In  all  the  36  square  miles 
of  Lake  Township  there  were  only  3,360  persons  in  1870,  and  all  the 
territory  south  of  Thirty-ninth  Street  to  One  Hundred  and  Thirty- 
eighth  Street  from  State  Street  to  the  lake  contained  only  3,644  people 
in  the  same  year.  The  growth  of  the  city  pushing  farthest  along  the 
main  streets  had  nearly  reached  Kedzie  Avenue  at  Madison  Street; 
it  had  proceeded  to  Thirty-ninth  and  Cottage  Grove  Avenue  and  Mil- 
waukee and  North  avenues,  but  in  between  there  were  many  gaps  and 
stretches  of  undeveloped  land.  The  two  hundred  or  more  houses  within 
a  mile  of  Englewood  in  1873  made  an  imposing  appearance  in  contrast 
with  the  vacant  prairie  of  a  few  years  before,63  but  the  population  of 
even  such  settled  areas  was  sparse  in  comparison  with  the  compact 
settlement  of  the  same  land  at  the  present  time.  Not  only  were  there 
great  belts  of  vacant  land  such  as  that  from  Thirty-fifth  to  Sixty-third 
Street,  east  of  State  Street,  that  varied  in  width  from  half  a  mile  to 
over  a  mile,  but  the  great  tract  of  land  on  the  South  Side  south  of  Sixty- 
seventh  Street  and  west  of  Ashland  Avenue  was  nearly  all  vacant, 
except  for  the  small  settlements  at  Cornell  and  South  Chicago.  The 
land  on  the  North  Side  north  of  Fullerton  and  west  of  Western  Avenue 
was  an  almost  empty  prairie. 

A  survey  of  Chicago  land  values  at  the  peak  of  1873. — In  the  ten 
years  from  the  autumn  of  1862  to  the  spring  of  1873,  the  total  value  of 
the  211  square  miles  of  land  in  the  present  city  limits  of  Chicago  had 
increased  nearly  500  per  cent,  or  from  approximately  $60,000,000  to  a 
computed  total  of  $575,000,000  notwithstanding  the  decline  of  over  50 
per  cent  in  the  level  of  wholesale  prices  that  had  occurred  after  i864.64 
Compared  with  the  peak  of  1856,  Chicago  land  values  had  increased 
360  per  cent  on  the  average,  although  the  level  of  wholesale  prices 
was  no  more  than  20  per  cent  higher  in  1873  than  in  1856.  The  peak 
values  of  land  by  uses  in  1873  were  $2,000  a  front  foot  for  the  best  in- 
side retail  business  and  financial  center  lots  on  State  and  Washington 
streets  and  $2,500  to  $3,000  a  foot  for  the  best  corners  on  State  Street 

6a  On  the  basis  of  a  family  of  five  persons  for  each  vacant  5o-by-i  25-foot  lot.  For  the 
figures  as  to  the  number  of  lots  in  1873  see  Chamberlin,  op.  cit.,  pp.  186-87. 

63  Frontispiece  in  Story  of  Englewood  shows  a  bird's-eye  view  of  Englewood  in  1872. 

64  For  detailed  prices  by  sections  see  Figs.  20,  21,  and  22. 


MAP  OF  CHICAGO 

-SHOWING- 
LAND  VALUES  PER  FRONT  FOOT 
1873 


FRONT  FOOT  VALUES  IN  DOLLARS 

••  100  AND  OVER 


50  TO  99 
26  TO  49 
4  TO  25 


BASED  ON  RECORDS  OF  ACTUAL  SALES 
PREPARED  BY  HOMER  HOYT 


I  * 


FIG.  20 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  113 

at  Washington,  Madison,  and  Monroe,65  at  Washington  and  LaSalle 
and  Clark  and  Madison,  $500  to  $1,250  a  foot  for  lots  in  the  wholesale 
section  in  the  downtown  area,  $300  to  $400  a  foot  for  manufacturing 
sites  on  the  south  branch  near  Western  Avenue,  $250  to  $500  a  foot  for 
the  most  fashionable  residence  property,  $100  to  $150  a  foot  for  the 
middle-class  homesites,  $20  to  $60  a  foot  for  workers'  homes,  $500  to 
$1,000  a  foot  for  the  best  sites  on  secondary  business  streets,  and  $50  to 
$200  a  foot  for  inferior  locations  on  commercial  streets  in  the  poorer 
quarters,  $10  to  $100  a  foot  for  suburban  lots,  and  $500  to  $2,000  an 
acre  for  outlying  land  near  the  city.  It  was  contended  by  current  writ- 
ers that  these  values  were  low  and  that  the  land  in  the  downtown  area, 
on  the  basis  of  capitalized  rents,  should  sell  for  three  times  as  much  as 
its  ruling  market  price.  The  optimists,  who  already  predicted  that  the 
young  city  would  eventually  be  the  largest  in  the  world,  compared  the 
peak  price  of  $30  a  square  foot  for  the  most  expensive  Chicago  land 
with  the  $100  a  square  foot  paid  in  Boston,  the  $167  a  square  foot  in 
New  York  and  the  $320  a  square  foot  in  London.66 

The  outstanding  feature  in  the  rise  of  Chicago  land  values  in  the 
period  from  1862  to  1873  had  been  the  extraordinary  advance  in  the 
value  of  the  land  from  three  miles  to  six  and  eight  miles  from  the  center 
of  the  city,  particularly  on  the  South  Side  where  the  fashionable  avenues, 
the  aristocratic  suburbs,  the  largest  parks,  and  five  of  the  ten  trunk- 
line  railroads  combined  to  send  land  values  south  of  Thirty-ninth  Street 
upward  from  a  few  million  dollars  in  1862  to  $123,000,000  in  1873. 
While  the  average  gain  in  value  in  the  area  within  one  mile  from  State 
and  Madison  streets  from  1856  to  1873  had  been  only  150  per  cent,  with 
lots  on  Lake  Street  and  South  Water  Street  actually  declining  in  selling 
price,  and  while  the  belts  from  one  to  two  miles  from  State  and  Madi- 
son streets  had  gained  180  per  cent  and  332  per  cent,  respectively,  the 
belt  from  three  to  four  miles  from  State  and  Madison  streets  had  in- 
creased in  value  over  1,000  per  cent  and  the  160  square  miles  in  the 
present  city  limits  that  lie  over  four  miles  from  State  and  Madison 
had  appreciated  from  $12,000,000  to  $187,000,000,  a  gain  of  over  1,460 
per  cent.  The  combined  effect  of  suburban  railroads  with  increasing 
train  service,  the  horse-car  lines,  the  new  belt  of  parks  and  boulevards; 

6s  For  detailed  sales  in  the  central  business  district  and  other  sections  of  the  city,  1870- 
73,  see  Chamberlin,  op.  cit.t  pp.  298-306,  and  Figs.  71  and  73. 
66  Chicago  Tribune,  May  31,  1878. 


MAP  OF  CHICAGO 

-SHOWING- 

LAND  VALUES -1 873 

AVERAGE  VALUES  FOR  EACH  SQUARE  MILE  IN  DOLLARS  PER  ACRE 
SOURCE:  ACTUAL  SALES 


-40^500^  675   i  875 
2o"bp>200O,i  1000  I 


300    ~IDOQ. !  1200  ;  2000 


50C(2500uHir    i  6000;  ^000; 

j.. yjjL, 

1200  25001  3500 1-1000 


i  600  ;  lOOO^OOOl  2000J  4000J  6000;     20,000  \\ 
.L J-.-rli ; ', L 1 1— —\4rtnni7 

!/          •  I  i  I5.0OO1          \i\ 


i-*00   ;  1000  j  1000  !  2000  j  3000;  30001    "F- 


200  !  300  :  400  :  eoo  i  aoo  :  2000:  3000 1  3000  i  i |  sooo 

!         :        !  lojooo: ,«„, 


soo  ;     r^n    i  'oooj  ISOOJBOOO;  sqpoj^L^ 


300   !  500   I  500. -i   1000  ;    1500 1  250'o;  2000  ;  <^Q 


300  j  5tfO   j  500  j   1000 !   1500  i  2000  j   1500  i   1500 


V"i ir 

ioobj  i50p  :  1500!  tooo ! 


1200  I  \I200J   600;     600  /    600 
' 


— «---- j. ]*r>— j J. r. 

8n°   !  1200  '^-'l200  !   600  ;    50Q  • 

600  ;  500  ;  500 ;  50o 
i 4— -V 


FIG.  21 


MAP  OF  CHICAGO 


VALUES  -1870  TO  1873 
INDICATED  &Y  SALES  OF  ACRE  TRACTS 


LEGEND 

LOCATION  AND  EXTENT  OF  AREAS  SOLD. 
THE  PRICE  IN  DOLLARS  PER  ACRE  IS 
INDICATED  BY  THE  FIGURE  IN  THE  SAME 
SQUARE  MILE  SECTION 


!     l 


FIG.  22 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


the  fire  limits  prohibiting  wooden  buildings  near  the  business  center; 
.the  lower  tax  and  assessment  rates  in  the  suburbs;  the  removal  of  in- 
dustries and  carshops  to  the  outer  edges  of  the  city;  the  fear  of  another 
great  fire;  and  the  desire  to  escape  the  noise  and  odors  of  streets  lacking 
pavements  and  sewers  had  started  a  heavy  migration  to  the  land  on 
the  fringe  of  old  settlements  and  had  stimulated  the  imagination  of 
land-buyers  as  to  the  possibilities  of  even  greater  migration  in  the  fu- 
ture. Whereas  in  the  first  boom  of  1836  land  values  in  the  first  mile 
from  State  and  Madison  streets  had  represented  56  per  cent  and  in  the 
second  boom  of  1856  40  per  cent,  they  now  represented  only  22  per  cent 
of  the  total  land  value  in  the  present  city  limits  of  Chicago ;  while  the 

TABLE  III 

CHICAGO  LAND  VALUES  BY  MILE  ZONES  FROM  STATE  AND 

MADISON  STREETS,  1836-79 

(In  Thousands  of  Dollars) 


Zone  in  Miles 

1836 

1843 

1856 

1861 

1873 

1879 

I 

$e   QOO 

$      810 

$f  I    OOO 

$25  ooo 

$125  ooo 

$  60  ooo 

1—2 

2,OOO 

200 

•77    OOO 

18  ooo 

IO7    OOO 

60  ooo 

2—  3 

816 

80 

1  8  soo 

IO   OOO 

8  1  700 

40  ooo 

3—4  

416 

40 

7,000 

3  ooo 

78  600 

30  ooo 

Over  4  

i  ,400 

280 

12,000 

4,000 

187  ooo 

CQ   OOO 

Total  

$10,532 

$1,410 

$125,500 

$60,000 

$575,300 

$240,000 

value  of  the  160  square  miles  of  the  present  city  that  was  more  than 
four  miles  from  State  and  Madison  increased  from  7  per  cent  of  the 
total  in  1836  and  10  per  cent  of  the  total  in  1856  to  33  per  cent  of  the 
total  in  1873.  The  land  within  the  city  limits  of  1873  was  then  valued 
at  $36i,ooo,ooo,67  and  that  between  those  limits  and  the  present  city 
limits  at  $214,000,000. 

67  Colbert  (dp.  cit.,  p.  137)  estimates  that  in  1871  the  assessed  values  of  land  in  Chicago 
were  60  per  cent  of  true  values;  the  following  is  his  estimate  of  the  total  land  values  in 
1871  and  the  writer's  estimate  for  1873: 


Location 

Assessed  Value 
Land  Only,  1871 

Cash  Value, 
1871 

Estimated  Value, 
1873 

South  division  
West  division 

$  82,609,600 

$137,683,000 

$161,500,000 

North  division  

28,357,280 

Total  

$204  886  ooo 

$  6 

'        ' 

In  addition  to  the  amount  included  in  Colbert's  figures,  there  was  tax-exempt  property  in- 
cluding land,  buildings,  and  personal  property  which  Colbert  estimated  had  a  cash  value  of 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  117 

E.   THE  PANIC  OF  1873  AND  THE  SUBSEQUENT  DEPRESSION 

The  last  phase  of  the  boom  in  the  spring  of  1873  was  a  continuation 
of  the  rapid  rise  in  land  values  near  the  South  and  West  Side  parks,  in 
Washington  Heights  and  South  Chicago.  The  selling  prices  of  land 
in  the  built-up  sections  of  the  city  remained  practically  stationary.  In 
May  the  market  grew  dull  even  in  the  outlying  areas.  There  was  yet  no 
fear  of  a  collapse  of  the  structure  of  land  values  that  had  been  reared 
so  high  during  the  last  ten  years.  It  was  believed  that  a  deflation  could 
be  caused  only  by  a  catastrophe,  and  in  this  category  were  placed  such 
events  as  the  panic  of  1857,  the  Civil  War,  and  the  great  fire. 

The  course  of  events  then  regarded  as  normal  had,  however,  pro- 
duced a  dangerous  situation  for  speculative  landholders  by  the  summer 
of  1873.  Municipal  extravagance,  excessive  outlays  on  magnificent 
business  blocks  built  at  high  cost  on  borrowed  money,  lavish  expendi- 
tures on  street  improvements  in  sections  where  they  were  not  required, 
overexpanded  subdivision  activity,  and  a  disproportionately  large 
amount  of  real  estate  purchases  on  small  down  payments — all  these 
had  been  the  result  of  the  extreme  optimism  of  the  times.  Looking 
back  at  the  situation  "in  the  cold,  gray  dawn  of  the  morning  after,"  it 
was  discovered  that  in  city  affairs  there  had  been  "lavish  expenditures, 
downright  thievery  on  a  mammoth  scale,  and  the  creation  of  sinecures 
for  political  abettors,"68  and  that  "the  city  [had]  acceded  to  the  demand 
of  every  real  estate  speculator  who  asked  for  improvements."69  The 
value  of  real  estate  had,  in  many  instances,  been  raised  on  the  strength 
of  projected  improvements  far  more  than  was  justified. 

The  practice  had  been  [for]  the  owner  to  add  immediately  to  his  price  all  that 
the  entire  good  of  the  enterprise  can  bring  at  its  completion.  Cases  are  numerous 
in  this  county  where  thousands  of  per  cent  have  been  added  to  the  prices  of  lots 
as  soon  as  some  great  enterprise  was  authorized  by  law.?0 

Reviewing  the  Chicago  real  estate  market  of  1871  to  1873  from  the 
vantage  ground  of  three  years  afterward,  the  editor  of  the  Real  Estate 
and  Building  Journal  thus  described  its  various  moods  and  tendencies: 


$52,951,000  and  which  he  did  not  include  in  the  foregoing  estimate,  but  the  land  element  of 
which  is  included  in  the  writer's  estimate.  There  was  also  a  very  marked  rise  in  the  value 
of  land  on  the  outer  edge  of  the  city  within  the  limits  of  the  city  of  1873  on  the  South  and 
West  sides  from  1871  to  1873. 

68  Real  Estate  and  Building  Journal,  August,  5,  1876. 

*  Ibid.,  April  i,  1876.  T°  Ibid.,  July  22,  1876. 


n8  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

When  after  the  fire  everybody  was  anxious  to  take  advantage  of  the  impover- 
ished condition  of  the  property  owners  and  buy  out  the  ruins  of  their  fortune  at  a 
sacrifice,  it  was  very  easy  to  find  buyers.  The  market  naturally  took  on  a  feverish 
phase,  its  pulse  beat  hot  and  quick  and  sales  of  $2,000,000  a  week  and  over  were  not 
exceptional.  The  great  demand  almost  immediately  sent  values  kiting  upwards, 
and  ere  two  years  had  passed  business  lots  were  bringing  twice,  thrice,  and,  in  some 
cases,  four  times  as  much  as  in  the  date  of  the  city's  destruction.  Every  kind  of 
property,  city  and  suburban,  felt  the  influence  of  this  abnormal  inquiry,  and  fol- 
lowed in  a  more  modest  rate,  the  wake  of  business  property  values.  Adventurers 
flocked  into  the  city,  laid  out  supposititious  plats  and  sold  to  the  people  who  were 
not  too  particular  to  inquire  into  titles  in  their  anxiety  to  get  hold  of  lots,  blocks 
or  acres  in  this  favored  section.  Honest  men,  seeing  nothing  but  a  golden  future 
before  them — rapid  sales  and  handsome  profits — bought  heavy  interests,  paying 
perhaps  one-tenth,  perhaps  more,  of  the  purchase  money  down  and  giving  trust 
deeds  for  the  remainder.  Builders  were,  if  possible,  even  more  sanguine  and  put  up 
magnificent  business  palaces,  running  in  debt  for  the  site  and  material  to  a  depth 
that  in  the  flushest  times  would  hopelessly  sink  them  in  adversity  and  bankruptcy. 
Subdivisions  were  laid  out  every  day,  new  railroads  projected  and  partially  carried 
through  and  lots  went  faster  than  the  deeds  could  be  made  out.  The  city  authori- 
ties found  no  difficulty  in  obtaining  money  to  inaugurate  improvements  on  streets 
and  alleys  amounting  to  millions.  It  made  its  levies  to  meet  them  and  for  a  year  or 
two  collected  taxes  without  difficulty.71 

Such  a  calm  analysis  of  the  land  market  could  not  have  been  made  in 
1873  when  the  people  were  still  laboring  under  the  excitement  of  the 
boom.  In  the  summer  of  1873,  the  upward  movement  in  land  values 
was  nevertheless  being  halted  by  a  falling-off  in  the  cash  resources  of 
prospective  buyers.  The  wages  of  bricklayers,  carpenters,  and  other 
skilled  build  ing- trade  workers  had  fallen  from  the  five-dollars-  to  ten- 
dollars-a-day  level  of  1872  to  three  dollars  a  day,  and  these  laborers 
who  had  been  heavy  purchasers  of  cheap  lots  in  1872  no  longer  had  a 
surplus  for  such  investments.  The  rents  of  business  blocks  in  parts  of 
the  downtown  area  had  declined  and  business  profits  were  receding. 
New  surplus  funds  having  dwindled,  and  lot  purchasers  finding  it  diffi- 
cult to  dispose  of  their  earlier  investments  and  being  called  upon  to 
meet  second  payments  upon  the  purchases  already  made  as  well  as 
taxes,  there  was  a  waning  in  the  purchasing  power  that  was  necessary 
for  an  expanding  price  level.  Moreover,  as  soon  as  land  values  halted 
in  their  advance,  the  desire  to  purchase  land  fell  off  sharply,  for  nothing 
so  quickly  stops  an  upturn  as  the  belief  that  a  commodity  can  be 
bought  next  month  or  next  year  at  the  same  price. 

7*  Ibid.,  May  13,  1876. 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  119 

After  a  lull  lasting  from  May  to  September,  1873,  the  landholders, 
who  were  waiting  for  an  expected  revival  of  the  market  in  the  autumn, 
were  startled  by  the  announcement  on  September  18  of  the  failure  of 
Jay  Cooke  and  Company  in  New  York.  In  quick  succession  thereafter 
came  the  crash  on  the  stock  market,  the  series  of  bank  suspensions,  and 
the  commercial  failures  that  characterized  the  panic  of  1873.  There 
was  no  sudden  deflation  of  Chicago  land  values,  however.  Some  land- 
owners, hard  pressed  for  cash  to  meet  commercial  obligations,  found  a 
ready  market  for  their  lots  on  the  fashionable  avenues  at  a  20  per  cent 
reduction  from  the  peak  prices  of  1873.  They  were  aided  in  this  policy 
by  the  abundance  of  loan  funds  offered  to  renew  mortgages.  During 
1874,  16,526  real  estate  loans  for  a  total  of  $124,000,000  were  negoti- 
ated to  enable  landowners  to  carry  their  obligations.72  Land  values 
had  shrunk  on  the  average  20  per  cent  by  the  spring  of  1874,  but 
property  could  be  sold  for  cash  by  those  who  were  willing  to  make  this 
reduction. 

The  forces  of  depression  were  now  slowly  grinding  away.  Between 
1873  and  1874  the  number  of  workers  employed  in  Chicago  manufac- 
turing plants  dropped  from  60,000  to  52,000  and  the  wages  paid  them 
from  $32,000,000  to  $26,5oo,ooo.73  The  annual  value  of  new  construc- 
tion, after  the  rush  of  rebuilding  the  burnt  area,  had  in  the  same  inter- 
val dropped  from  $25,500,000  to  $5,785,000.™  The  wages  of  common 
labor  had  been  reduced  from  $2.00  to  $1.00  and  even  less  a  day.  There 
were  thousands  of  unemployed  men  being  supported  by  public  charity. 
House  and  business  rents  were  declining.  While  there  was  a  reduction 
of  one- third  in  the  cost  of  new  construction  in  1874  as  compared  with 
1872,  the  effect  was  to  cause  a  downward  revision  in  the  reproduction 
cost  of  all  buildings  previously  erected. 

Chicago  property  owners  in  1875  were  faced  with  a  situation  in  which 
their  gross  incomes  from  rents  were  drastically  declining,  while  their 
expenses  in  the  form  of  fixed  interest  charges  at  the  rate  of  8-10  per 
cent  per  annum  and  of  undiminished  tax  burdens  remained  the  same. 
The  value  of  their  buildings  had  fallen  as  much  as  40  per  cent  because 
of  the  lower  cost  of  construction.75  To  escape  the  resulting  loss,  they 
sought  to  trade  their  mortgaged  property  for  farms  or  other  property. 

v  Chicago  Tribune,  January  6,  1878. 

73  Industrial  Chicago,  III,  514.  74  Ibid.t  I,  149. 

75  Real  Estate  and  Building  Journal,  July  i,  1876. 


120  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

"During  the  first  quarter  of  1875  four-fifths  of  the  sales  made  were 
[exchanges]  for  other  property  with  little  if  any  cash.  Nine  months  ex- 
hausted this  sort  of  dicker."76 

The  cash  buyers  of  1874  had  disappeared  from  the  market.  The 
owners  of  vacant  lots,  in  order  to  secure  an  income  by  any  possible 
means,  in  certain  cases  allowed  builders  to  place  mortgages  on  their 
lots  to  finance  buildings.  This  frequently  resulted  in  the  loss  of  their 
entire  equity.77  The  majority  of  the  property  owners  could  do  nothing 
to  shift  their  burden,  and  they  waited  with  growing  anxiety  for  the 
return  of  an  active  market  like  that  of  1872. 

Instead  of  improving  conditions,  the  attrition  of  the  forces  of  de- 
pression continued  to  wear  down  the  reserve  power  of  the  landowners. 
The  number  of  transfers  by  deed  declined  from  64,602  in  1874  to  57,638 
in  1875,  50,884  in  1876,  and  47,860  in  i877.78  As  the  depression  con- 
tinued, more  and  more  of  these  transfers  represented  exchanges,  fore- 
closures, or  nominal  conveyances,  so  that  the  number  of  actual  cash 
sales  dropped  to  a  far  greater  extent  than  these  figures  indicate.  New 
loans  or  renewals  of  old  loans  became  more  difficult  to  secure,  the  total 
advances  on  new  mortgages  declining  from  $124,000,000  in  1874  to 
$89,000,000  in  1875  and  $30,000,000  in  1876.  Foreclosures  had  corre- 
spondingly increased  from  1,069  in  1874  to  1,166  in  1875,  1,284  in  1876, 
and  1,803  in  1877. 79  Rents  had  declined  fully  20  per  cent  on  houses  and 
offices  by  1876,  and  by  1877  average  rents  were  30  per  cent  lower  than 
in  i873.8°  Houses  renting  for  over  $100  a  month  were  a  drug  on  the 
market. 

In  1876  Chicago  land  values  were  in  a  chaotic  state,  the  prices  in  the 
same  block  varying  according  to  the  financial  condition  of  the  owner. 

Prices  vary  very  much.  If  he  [i.e.,  a  prospective  buyer]  would  select  such  a 
block,  lot  or  tract  as  he  wishes,  and  go  to  the  owner  and  ask  his  price,  he  would  be 
answered  according  to  the  financial  condition  of  the  owner.  If  he  had  bought  and 
paid  for  his  property,  the  advances  will  all  have  to  come  from  his  side.  If,  on  the 
contrary,  the  owner  or  holder  rather  has  bought  in  times  of  flush  confidence  and 
made  a  small  payment  taking  a  large  risk  and  finds  himself  unable  to  meet  it,  he 
will  instantly  give  him  the  lowest  price  he  can  save  himself  with,  and  if  buyers  do 
not  give  that,  he  will  let  it  go  under  the  trustee's  hammer.81 

7«  Ibid.,  April  8,  1878.  78  Mid.,  January  6,  1878. 

77  Chicago  Tribune,  November  19,  1876.  79  ibid. 

80  Real  Estate  and  Building  Journal,  March  18,  1876. 

81  Ibid.,  August  19,  1876. 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  121 

Those  who  were  not  forced  to  sell  their  holdings  did  not  offer  them  on  the 
market,  as  they  could  not  realize  what  they  had  paid. 

Nearly  all  [holders  of  acre  property]  are  holding  it  for  a  rise  in  prices  and  have 
no  intention  of  selling  it  for  two  years  at  least.  Never  has  there  been  so  little  land 
for  sale  in  this  city  and  county  as  now.82 

There  is  no  prospect  of  uniformity  in  the  values  of  business  property  for  the 
reason  that  much  of  it  has  been  purchased  to  hold  for  a  term  of  years  as  an  interest- 
yielding  investment  and  it  is  not  for  sale  at  any  such  price  as  was  last  paid  for  it. 
One  cannot  point  to  a  business  block,  lot  or  residence  sold  at  a  sacrifice  in  Chicago 
that  was  not  so  heavily  encumbered  as  to  make  it  necessary  to  dispose  of  it.  Rents 
in  good  localities  are  not  so  low  as  not  to  pay  a  reasonable  interest  besides  the  taxes 
on  the  property,  and  in  other  places  less  eligible  where  they  have  fallen  too  low 
for  that,  the  owners  comfort  themselves  with  the  belief  that  though  they  are  losing 
something,  they  will  stick  to  their  property  and  make  it  up  in  the  future  advance.8* 

In  a  land  market  where  some  were  holding  their  property  at  the  peak 
prices  of  1873,  and  others  were  willing  to  accept  anything  above  the 
mortgage,  while  there  were  few  sales  at  any  price,  the  current  observers 
of  land  values  confessed  the  need  of  some  more  definite  standard  of 
value. 

At  this  time  when  values  are  at  the  lowest  ebb,  when  one  can  scarcely  name  a 
cash  price  on  property,  it  would  be  a  capital  move  for  a  congress  of  our  most  ex- 
perienced and  trusted  men  to  convene  and  arrange  a  schedule  of  prices  upon  prop- 
erty in  the  city  and  county,  gauging  them  upon  the  actual  advantages  possessed 
by  different  tracts.  The  schedule  could  be  accepted  or  not  by  owners,  yet  it  would 
have  a  moral  influence  upon  home  and  outside  capital  beyond  anything  else  that 
could  be  devised.  It  is  doubtful  if  this  could  be  done.  Such  is  the  jealousy  of  pro- 
prietors, and  so  confirmed  the  habit  of  painting  every  interest  in  roseate  colors,  that 
anything  like  an  amicable  agreement  on  values  would  perhaps  be  improbable.  But 
whether  definite  conclusions  could  or  could  not  be  reached,  the  discussion  would 
throw  light  upon  the  market  and  enable  investors  to  act  more  understandingly 
than  is  possible  under  the  widely  differing  representations  their  inquiry  evolves 
from  owners  and  agents  now.8* 

Notwithstanding  doubts  as  to  the  exact  range  of  prices,  there  was 
no  question  in  1876  but  that  land  values  had  been  steadily  declining 
since  1873,  starting  first  with  the  depreciation  in  buildings. 

Thus  in  improved  business,  the  price  went  down,  not  at  first  upon  the  lots  but 
upon  the  building.  Added  to  this,  heavy  incumbrances  matured  and  parties  were 
compelled  to  sell  at  any  price.  Eventually  this  affected  other  blocks,  not  similarly 
encumbered,  and  all  classes  of  improved  property  declined  in  sympathy.85 

82  Ibid.,  June  3,  1876.  8<  Ibid.,  July  22,  1876. 

83  Ibid.,  August  19,  1876.  8«  Ibid.,  July  i,  1876. 


122  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

The  decline  had  also  been  accentuated  by  the  burden  of  taxes  for 
improvements  constructed  far  in  advance  of  their  need. 

There  are  miles  of  gas  mains,  sewers  and  water  mains,  sidewalks  and  curbing 
lying  along  vacant  territory  which  will  not  need  them  for  years.  In  many  sections 
needed  improvements  were  left  unfinished  by  the  sudden  crippling  of  the  money 
market.86 

The  painfully  slow  process  by  which  the  land- value  peaks  of  1872 
were  worn  down  is  thus  described: 

The  land  market  is  at  the  present  tune  [July,  1876]  in  a  lower  condition,  as  re- 
gards transfers,  prices  and  interest  felt  in  it,  than  it  has  been  in  the  history  of  the 
city  since  it  became  a  metropolis.  The  record  of  sales  is  extremely  light  and  the 
inquiry  dull  in  the  extreme.  Prices  have  been  steadily  falling  from  the  fall  of  1873 
to  the  just  ended  spring,  and  investments  were  greatly  discouraged.  Owners  and 
dealers  have  earnestly  watched  the  decline,  unwilling  to  do  anything  until  it 
ceased  and  this  very  disposition,  by  almost  destroying  the  demand,  accelerated  the 
downfall  of  prices  and  made  men  more  and  more  fearful  of  buying.  If  the  decline 
had  been  a  sudden  spasm,  lasting  but  a  few  months  and  had  then  suddenly  stopped, 
there  would  have  been  good  ground  for  mistrusting  the  situation  and  holding  back 
money  from  real  property.  Or  if  it  had  been  precipitate  as  in  some  eastern  cities 
and  in  San  Francisco  after  the  bursting  of  the  great  mining  bubbles,  there  would 
then  be  ample  cause  for  serious  alarm  and  for  directing  one's  attention  to  other 
channels  for  the  use  of  money.  But  the  fall  in  values  had  been  gradual.  The  de- 
cline in  values  commenced,  continued  and  ended  slowly.  Deliberation  has  marked 
every  circumstance  affecting  the  market.  There  was  no  wild  scare,  no  rushing,  no 
jostling.  The  market,  under  the  weight  of  a  more  crushing  panic  than  the  thirties, 
yielded  inch  by  inch,  under  the  influence  of  maturing  notes,  national  turpitude  on 
the  financial  problem,  local  corruption  and  malappropriation  of  the  public  funds, 
the  discouraging  of  the  purchasing  of  homes  by  the  lowering  of  rents  and  various 
other  adverse  influences.  It  was  stunned  by  the  shock  of  tumbling  fortunes  and 
exploding  schemes.  Plans  long  maturing  were  at  once  rendered  inoperative  and 
dealers  and  owners  were  confused,  scarcely  knowing  which  way  to  turn  to  save 
themselves  from  a  ruin  that  seemed  impending  over  all.87 

The  effect  of  this  declining  land  market  on  the  individuals  involved  in 
it  was  pathetic. 

In  the  entire  history  of  land  dealing  there  has  not  been  a  reverse  which  has  lasted 
so  long  or  caused  such  depreciation  as  the  one  under  which  the  market  has  labored 
for  three  years — years  strewn  with  the  wrecks  of  fortunes  and  the  destruction  of 
hopes.  Indeed  it  is  by  no  means  certain  that  human  minds  and  lives  have  not  been 
destroyed  under  the  burden  of  disappointed  expectations  and  the  obloquy  which 
has  been  cast  upon  reputations — previously  fair  and  bright — through  the  inability 
of  persons  to  meet  their  promises  and  carry  out  their  contracts.  When  a  man  has 

86  Ibid.,  April  i,  1876.  "7  Ibid.,  July  8,  1876. 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  123 

worked  and  studied  for  years  in  gathering  a  sum  together  for  investment  in  some- 
thing which  he  believes  to  be  sure  to  give  him  respite  from  toil  and  enable  him  to 
live  at  ease,  if  he  makes  a  mistake  in  judgment  and  places  his  funds  in  some  non- 
productive property,  where  because  of  the  panic  they  must  be  locked  up  as  com- 
pletely as  if  behind  impregnable  locks  so  that  he  cannot  use  them  even  for  life's 
necessity,  when  after  waiting  patiently  and  hopefully  in  vain  for  better  days  until 
he  is  pressed  by  his  creditors  to  the  wall,  when  he  finds  all  these  expectations  so 
long  in  being  realized,  it  is  not  strange  if  he  grows  disheartened,  hopeless  and 
gloomy,  a  state  of  mind  favorable  to  even  greater  miseries.  Some  of  our  dealers 
have  passed  away.  No  one  knows  how  much  the  reverses  of  fortune  and  loss  of 
business  may  have  contributed  to  the  end.88 

Sad  as  the  year  1876  was  to  the  holders  of  incumbered  property,  the 
year  1877  was  to  fill  their  cup  of  misery  to  the  brim.  The  bank  failures 
in  Chicago  that  had  followed  in  the  wake  of  the  panic  of  1873  culminat- 
ed in  1877  with  the  failure  of  the  largest  savings  banks  in  the  city — the 
Columbian  and  the  Bee  Hive — making  a  total  of  twenty-one  bank  fail- 
ures in  four  years.  Serious  labor  riots  broke  out  all  over  the  United 
States,  and  on  July  5,  1877,  a  pitched  battle  was  fought  between  the 
police  and  a  great  mob  at  the  Halsted  Street  bridge  over  the  south 
branch  in  which  twenty  were  killed  and  seventy  injured.  In  this  pe- 
riod, when  capitalists  were  frightened  by  these  industrial  disturbances, 
twelve  thousand  loans  for  a  total  of  $50,000,000  that  had  been  made  by 
local  property  owners  to  finance  the  rebuilding  after  the  fire  fell  due.89 
Scant  capital  was  available  for  refunding  these  maturing  obligations  or 
for  buying  property  at  any  price.  Wealthy  men  were  hoarding  their 
money  because  currency  was  constantly  appreciating  in  terms  of  gold, 
while  lands  and  commodities  had  been  constantly  declining  in  terms  of 
currency.  The  holders  of  property  who  could  not  pay  off  their  mort- 
gages were  given  short  shift.90  In  most  cases  no  one  attended  these 
sales  but  the  holder  of  the  mortgage.  He  bid  in  the  property  at  his  own 
price,  sometimes  as  low  as  one-fourth  of  the  amount  of  the  mortgage, 
and  secured  a  deficiency  judgment  for  the  balance.91  The  once  opulent 

88  Ibid.,  December  30,  1876. 

*9  Chicago  Tribune,  January  28,  1877. 

90  The  period  of  redemption  allowed  by  the  laws  of  Illinois  was  one  year  for  the  mortgagor 
and  an  additional  three  months  for  creditors,  which  is  the  same  as  at  present,  but  the  mort- 
gagees who  were  residents  of  other  states  were  allowed  to  foreclose  in  the  United  States 
district  court,  which  then  allowed  the  mortgagors  only  one  hundred  days  after  the  sale  in 
which  to  redeem. 

»*  Chicago  Tribune,  July  28,  1878. 


124  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

real  estate  operators  in  many  cases  thus  not  only  lost  their  land  but 
were  forced  to  go  into  bankruptcy  to  avoid  paying  personal  judgments 
on  the  original  purchase  price  of  the  land.  The  fees  of  courts  and 
lawyers  exacted  a  heavy  toll  even  from  the  winning  side,  and  these 
charges,  in  addition  to  taxes  and  special  assessments  with  their  penal- 
ties of  100  per  cent  a  year  for  late  payment,  were  added  to  the  costs  of 
holding  land.  Of  the  long  list  of  men  who  were  thus  reduced  from  afflu- 
ence to  poverty  when  "Fickle  Fortune,  in  contrast  to  her  previous 
smiling  visage,  threw  aside  her  mask  and  showed  an  ugly  countenance," 
may  be  mentioned  Samuel  H.  Walker,  reputed  to  be  worth  $15,000,000 
in  1873,  who  had  lost  all  his  property  by  1877.  If  the  best  improved 
real  estate  in  the  central  business  district  of  Chicago  was  thus  fore- 
closed, the  fate  of  vacant  land  can  be  imagined.  "It  first  grew  dull,  then 
stagnant  and  then  unsaleable."  In  1877  the  bottom  of  the  real  estate 
market  was  at  last  reached.  In  the  wreckage  of  some  real  estate  for- 
tunes, shrewd  capitalists  with  large  cash  resources  found  an  opportu- 
nity to  lay  the  foundations  for  huge  estates  in  the  future.  As  in  the  case 
of  the  aftermath  of  the  booms  of  1836  and  1856,  Chicago  land  values 
were  not  thoroughly  deflated  until  four  years  after  the  first  shock  of  the 
panic.  In  the  absence  of  short  selling  in  real  estate  and  the  lack  of  any 
organized  market  for  land  in  the  early  period  of  the  depression,  the 
landholders  kept  their  land  until  the  constant  attrition  of  interest 
charges,  taxes,  and  penalties  or  the  inability  to  renew  mortgages 
brought  foreclosure  proceedings  that  squeezed  out  the  equities  above 
the  mortgage.  Four  or  five  years  seemed  to  be  required  to  complete 
this  painful  process,  and  it  was  not  until  it  was  over  that  a  definite 
market  for  land  was  established  at  a  lower  level  of  values. 

In  1877  and  1878  it  had  to  be  mournfully  admitted  that  a  quick 
return  to  the  level  of  land  values  prevailing  in  1873  was  not  only  not  to 
be  expected,  but  that  the  values  obtaining  at  that  time  were  the  result 
of  a  hallucination  or  a  speculative  disease.  As  the  real  estate  editor  of 
the  Chicago  Tribune  said  in  1878: 

The  wills  of  the  wisp  [suburban  lots]  that  lured  speculators  to  their  financial 
death  in  the  happy  days  when  there  were  no  panics  are  extinguished.  The  water 
privileges  that  used  to  be  spoken  of  with  admiration  almost  too  deep  for  words  are 
now  candidly  alluded  to  as  swamp  lots.  The  outlying  districts  that  were  so  hand- 
somely mapped  and  platted  for  exhibition  in  the  agents'  offices  are  resignedly  if 
not  cheerfully  given  over  to  the  market  gardener  and  the  dairyman.'3 

*  Ibid.,  April  14,  1878. 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  125 

When  these  lines  were  published,  the  corners  of  Sixty- third  and 
Halsted93  and  Forty-seventh  and  Ashland  were  selling  for  $8.00  and 
$12  a  front  foot,94  land  near  Twenty-second  and  Ridgeland  in  Cicero95 
and  One  Hundred  and  Eleventh  and  Michigan  was  offered  for  $ioo96  an 
acre,  and  Marshall  Field  was  about  to  buy  the  present  campus  of  the 
University  of  Chicago  for  $5.00  a  front  foot.97 

F.   A  SURVEY  AT  THE  BOTTOM  IN  1877-79 

The  bottom  in  land  values  in  the  Chicago  area  for  this  period  was 
reached  in  1877  when  there  was  virtually  no  market  at  all,  but  it  is 
necessary  to  resort  to  the  sales  of  1878  and  1879  and  the  evidence  as 
to  the  extent  of  the  decline. 

The  total  land  value  of  the  211  square  miles  in  the  present  city  limits 
of  Chicago  declined  on  the  average  over  50  per  cent  from  a  total  of 
$575,000,000  in  1873  to  less  than  $250,000,000  in  i877.98  The  decline 
was  least  on  North  Dearborn  Street;  on  State  Street  near  Madison;  on 
West  Madison  Street,  which  continued  to  grow  during  the  depression 
until  it  was  solidly  built  up  to  Ashland  Avenue;  on  South  Michigan 
Avenue,  which  was  developing  fast  south  of  Thirty-second  Street  with 
the  growth  of  the  Stock  Yards;  in  the  Stock  Yards  district;  on  Wabash 
Avenue  north  of  Monroe  Street;  and  in  the  medium-grade  residential 
property  that  was  close  to  the  center  of  the  city  where  the  drop  varied 
from  33  to  50  per  cent. 

The  fall  in  land  values  was  approximately  50  per  cent  on  the  fashion- 
able West  Side  and  South  Side  residential  streets  except  on  South  Park 

93  Ibid.,  May  23, 1879.  A  deed  recorded  October  5,  1878,  showed  a  consideration  of  $800 
for  the  northwest  corner  of  Sixty-third  and  Halsted  streets,  75  by  139  feet. 

94  Ibid.,  November  21,  1878.  The  southeast  corner  of  Forty-seventh  and  Ashland,  47  by 
121,  sold  for  $600. 

^Ibid.,  November  12,  1878. 

96  Ibid.,  Octobers,  1879. 

97  Ibid.,  August  18,  1879.  Marshall  Field  paid  $79,166.67  for  63^  acres  between  Wood- 
lawn  and  Egandale  (Ellis),  Fifty-fifth  and  Fifty-ninth  streets. 

9*  Ibid.,  July  28,  1878:  "The  prices  realized  are  generally  half,  often  a  third,  perhaps 
even  less  than  one-fourth  those  ruling  a  few  years  ago." 

"Causes  of  General  Depression,"  Labor  and  Business  (H.R.,  46th  Cong.,  2d  sess.; 
Washington,  1879),  Misc.  Doc.  5:  "1873,  Chicago":  "CHAIRMAN:  What  is  the  average 
shrinkage  in  the  value  of  real  estate  in  this  city  comparing  the  present  time  with  an  average 
of  five  years  back?  MR.  CHARLES  RANDOLPH  [secretary  of  the  Board  of  Trade] :  It  would 
be  but  a  guess  on  my  part,  but  I  should  say  that  the  shrinkage  between  1873  and  today 
[1879]  would  be  from  forty  to  fifty  per  cent." 


MAP  OF  CHICAGO 

-SHOWING - 


HORSE  CAR  LINES  IN  I860 

NOTD STEAM  DUMMIES  OPERATED  ON  THE  COTT- 
'"— «  AGE  GROVE  LINE  SOUTH  OF  39  STREET  AND  ON  THE 

BROADWAY  LINE  NORTH  OF  OIVERSEY  BOULEVARD 


LEGEND 

LINES  BUILT  FROM  1859  TO  1865 
LINES  BUILT  FROM  1870  TO  1678 


FIG.  23 


A  PANIC,  A  CIVIL  WAR,  AND  A  GREAT  FIRE  127 

Avenue  where  it  exceeded  75  per  cent,  and  the  deflation  was  greatest 
on  Wabash  and  Michigan  avenues  south  of  Jackson,  on  land  near  the 
parks  and  in  all  suburban  and  outlying  lands  where  the  decline  varied 
from  75  to  90  per  cent.  For  example,  Michigan  Avenue  lots  near  Jack- 
son sold  for  $200  a  foot  compared  with  $1,000  a  foot  in  1873,  State  Street 
south  of  Jackson  at  $500  instead  of  $1,250  a  foot,  fashionable  residence 
lots  from  $75  to  $200  a  foot  instead  of  from  $250  to  $500  a  foot,  acres 
at  Forty-seventh  and  Drexel  at  $7,500  instead  of  $20,000  an  acre,  a 
tract  at  Twenty-fifth  and  State  Street  at  $5,000  instead  of  $15,000  an 
acre,  land  at  Sixty-third  and  Racine  at  $500  instead  of  $2,000  an  acre, 
Forty-eighth  and  Champlain  $2,350  an  acre  compared  with  $10,000 
an  acre,  and  tracts  in  Ravenswood  at  $375  instead  of  $3,000  an  acre. 
The  silver  lining. — It  was  some  consolation  to  Chicago  that  the  de- 
cline in  land  values  in  the  Central  Park  district  in  New  York  was  even 
greater  than  the  fall  of  land  values  in  Chicago,"  for  the  easterners  could 
not  point  to  Chicago  as  a  horrible  example  of  western  boom  methods 
when  they  were  in  the  same  situation.  Of  far  greater  significance  was 
the  fall  in  construction  costs,  the  decline  in  the  interest  rate  on  the  best 
real  estate  security  in  Chicago  from  8  per  cent  in  1873  to  6  per  cent  in 
i878,IO°  which  favored  a  constant  annual  accretion  of  thousands  of 
dwellings  built  at  low  cost,  the  number  being  875  in  1875,  1,636  in 
1876,  and  2,698  in  1877 — a  total  of  twenty-five  miles  of  frontage  for  the 
three  years.  The  packing  industry  was  growing,  with  Armour  and 
Swift  beginning  to  send  chilled  beef  East  in  refrigerator  cars,  while 
other  lines  of  manufacturing  and  the  wholesale  trades  were  maintaining 
their  volume  of  business.  Representatives  of  eastern  firms  were  coming 
to  Chicago  to  establish  branch  houses.  Population  was  about  to  catch 
up  with  the  supply  of  houses,  the  resumption  of  specie  payments  was 
not  far  away,  and  the  motive  for  hoarding  money  was  disappearing. 
The  telephone  had  been  invented  and  Edison  was  about  to  demonstrate 
his  electric  light.  The  first  apartments  had  appeared  in  Chicago. 
While  many  new  factors  were  thus  in  the  formative  stage,  the  street-car 
lines  on  Madison  Street,  Cottage  Grove  Avenue,  and  Milwaukee  Ave- 
nue were  being  extended  from  1875  to  1877  to  the  new  belt  of  parks 
as  Figure  23  shows. 

99  Chicago  Tribune,  October  27,  1876. 

100  Ibid.,  November  17,  1878. 


CHAPTER  IV 

THE  LAND  BOOM  OF  THE  FIRST  SKYSCRAPERS 
AND  THE  FIRST  WORLD'S  FAIR,  1878-98 

A.   RECOVERY  IN  GENERAL  BUSINESS  CONDITIONS,  1878-84 

The  prelude  to  the  recovery  of  Chicago  land  values  from  the  extreme 
depression  of  1877  was  the  beginning  of  improvement  in  general  busi- 
ness conditions  throughout  the  United  States.  The  prices  of  raw  mate- 
rials, the  wages  of  labor,  the  rents  of  houses  and  stores,  and  the  interest 
rates  for  capital  advances  having  been  reduced  to  an  extremely  low 
level  by  1877,  it  became  a  favorable  time  to  expand  manufacturing 
operations  to  replenish  depleted  stocks.  The  effect  of  good  crops  in 
1878  and  the  confidence  engendered  by  the  resumption  of  specie  pay- 
ments in  1879  gave  the  new  upward  movement  its  initial  impetus. 
Rising  prices  and  profits  margins  speeded  up  production,  increased  em- 
ployment, and  furnished  the  funds  for  a  brief  era  of  speculation  that 
culminated  in  1883.  From  1879  to  1883  the  railroad  mileage  of  the 
country  increased  50  per  cent  and  the  resulting  demand  for  steel  rails 
gave  a  great  impetus  to  the  iron  industry.  The  enlarged  demand  for 
labor  for  railroad  construction  and  for  heavy  work  in  factories  and 
mills  induced  a  fresh  volume  of  adult  immigrants  from  abroad.  Stimu- 
lated by  the  activity  of  the  agents  of  steamship  companies  and  fre- 
quently by  the  prepayment  of  the  $22  passage  money  by  friends  in 
America,  the  tide  of  this  immigration  increased  in  numbers  from  130,- 
502  in  1877  to  250,565  in  1879,  593,703  in  1880,  720,045  in  1881,  and 
730,349  in  1882,  a  new  peak.1 

The  effect  on  the  trade,  manufactures,  and  railroads  of  Chicago. — 
Chicago  was  at  a  focal  point  that  would  benefit  to  an  unusual  degree 
from  larger  western  crops,  increased  railroad  building,  and  an  improved 
demand  for  manufactured  products.  In  the  three  years  from  1880  to 
1882,  inclusive,  seven  new  trunk-line  railroads  entered  Chicago.2  In  the 
four  years  from  1878  to  1881,  inclusive,  Chicago  bank  clearings  in- 

1  Chicago  Tribune,  April  14,  1883. 

2  P.  L.  Tan,  "Belt  Railroads  of  Chicago"  (MS  thesis,  University  of  Chicago,  1931). 

128 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    129 


creased  from  less  than  $1,000,000,000  to  $2, 250,000,000.3  In  the  five 
years  from  1879  to  1883,  inclusive,  the  number  employed  in  Chicago 
manufactures  increased  from  62,948  to  114,457  and  the  wages  paid  from 
$35,000,000  to  $59,ooo,ooo.4  In  the  period  from  1877  to  1881  the  value  of 
the  wholesale  and  produce  trade  of  Chicago  rose  from  $387,000,000  to 
$7oo,ooo,ooo.s  From  1877  to  1883  the  population  of  Chicago  advanced 
from  420,000  to  590,693.  A  study  of  Table  IV,  giving  the  annual  trade 
indices  just  referred  to,  shows  a  particularly  rapid  increase  in  bank 
clearings  and  total  trade  from  1879  to  1881  and  a  slow  gain  thereafter 
to  1883. 

TABLE  IV 

THE  GROWTH  OF  CHICAGO,  1877-83,  AS  INDICATED  BY  BANK 

CLEARINGS,  NUMBER  EMPLOYED  IN  MANUFACTURES, 

TOTAL  TRADE,  AND  POPULATION 


Value  Manu- 

Year 

Bank 
Clearings 
(Millions  of 
Dollars) 

factures, 
Wholesale  and 
Produce  Trade 
(Millions  of 

No.  Employed 
in  Manu- 
factures 

Population 

Dollars) 

1877  

$1,045 

$     595 

58,213 

420,000 

1878  

967 

6^O 

67,504 

436,731 

1870 

I    2*8 

?6d 

62  04.8 

4.6  c  ooo 

1880 

I    726 

QOO 

80  ,  07  < 

tJO3,  2o8 

1881            .      . 

2.  240 

i  ,oi<; 

87  ,000 

<  30,000 

1882  

2,367 

1,045 

96,654 

560,000 

1883  

2,526 

1,050 

114,457 

590,693 

The  general  effect  of  improved  business  conditions  upon  Chicago  land 
values. — The  effect  of  the  increased  volume  of  trade  and  manufactures 
in  a  market  in  which  selling  prices  were  rising  faster  than  cost  prices  was 
greatly  to  increase  the  profits  of  business  men.  A  fund  of  new  capital 
was  thereby  coming  into  existence  that  was  available  for  investment.6 
To  this  freshly  created  surplus  there  was  added  by  1879  a  large  amount 
of  hoarded  wealth.  Prior  to  the  resumption  of  specie  payments,  the 
steady  rise  in  the  value  of  currency  in  terms  of  gold  and  other  commodi- 

3  Chicago  Tribune,  January  i,  1884. 

4  Industrial  Chicago,  III,  194.  s  Ibid. 

6  Bank  clearings  from  a  typewritten  statement  of  the  Chicago  Clearing  House  Associa- 
tion; number  employed  in  manufactures  from  ibid.;  the  value  of  manufactures,  wholesale 
and  produce  trade,  from  the  annual  reviews  of  the  Chicago  Tribune  (1878-84),  in  the  issues 
of  January  i  of  the  years  cited. 


130  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

ties  had  tempted  many  rich  men  to  lock  their  money  in  strong  boxes. 
As  soon  as  currency  reached  a  parity  with  gold  and  general  prices  be- 
gan to  rise,  these  funds  came  from  their  hiding  places.  Even  during  the 
hard  times  of  1876  and  1877  the  Chicago  Stock  Yards  magnates  and  the 
Chicago  capitalists  who  had  invested  in  Leadville  mines  had  accumu- 
lated fortunes.  With  the  return  of  a  more  prosperous  era  after  1879, 
however,  a  large  number  of  laborers,  employed  at  full  time,  began  to 
accumulate  small  amounts  of  capital.  Thus  in  all  ranks  of  society 
surplus  funds  were  accumulating  or  were  being  made  available  for  in- 
vestment. 

To  attract  this  surplus,  Chicago  real  estate  was  in  an  advantageous 
position.  As  compared  with  other  forms  of  investment  in  1879  it 
seemed  to  offer  the  highest  rate  of  return  compatible  with  safety.  From 
1872  to  1880,  the  net  yield  of  high-grade  bonds  had  fallen  from  6^  to  4 
per  cent  per  annum.7  In  the  same  interval  the  rate  of  interest  on  the 
best  real  estate  mortgages  in  Chicago  had  declined  from  8  to  6  per  cent 
per  annum.  The  collapse  of  the  Leadville  mining  boom  was  over  and 
mining  stocks  had  lost  their  popularity  when  many  of  them  became 
worthless.  The  failure  of  practically  all  the  savings  banks  in  Chicago  by 
1877  had  caused  the  laborers  to  avoid  them  as  places  for  depositing 
their  savings. 

On  the  other  hand,  Chicago  real  estate  in  the  central  business  dis- 
trict presented  the  prospect  of  increasing  rather  than  declining  net  in- 
come, and  of  ultimate  safety  of  principal,  rather  than  the  final  loss  of  all 
that  was  invested.  Rents  of  Chicago  improved  property  ceased  their 
downward  movement  in  1878,  and,  as  the  growth  of  population  and  the 
spreading-out  into  new  quarters  of  families  who  had  boarded  out  dur- 
ing the  depression  proceeded  for  a  time  faster  than  new  construction, 
rents  of  the  houses  in  the  $15-  to  $4o-a-month  class  advanced  25  per 
cent  in  1879.  The  advance  in  house  rents  and  in  store  rents,  particular- 
ly on  State  and  South  Water  streets,  continued  until  in  1882  average 
rents  were  75  per  cent  higher  than  in  1878.  Meanwhile,  the  great  mu- 
nicipal extravagance  that  had  prevailed  prior  to  1873  had  been  sharply 
checked,  with  the  result  that  the  annual  tax  bill  began  to  decline  after 

7  Yield  on  high-grade  rail  bonds  as  computed  by  the  National  Bureau  of  Economic 
Research,  cited  in  Philip  W.  Kniskern,  Real  Estate  Appraisal  and  Valuation  (1933),  p. 
407.  For  real  estate  loan  rate  in  Chicago,  see  Fig.  80,  and  Chicago  Tribune,  December 
28,  1879. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    131 

1874.  Delinquent  taxes  had  fallen  from  $500,399,  or  nearly  25  per  cent 
of  the  total  tax  bill,  in  1877  to  $28,866,  or  less  than  2  per  cent  of  the 
total  tax  bill,  in  1879.  Suburban  houses  that  had  been  empty  for  five 
years  were  being  occupied,  heavy  masses  of  brick  and  masonry  were  be- 
ing pushed  up  to  nine  stories  in  one  section  of  the  downtown  area,  and 
a  more  intensive  and  more  profitable  type  of  residential  building,  the 
apartment,  was  spreading  rapidly. 

Thus  at  this  time  when  the  return  from  improved  Chicago  real  estate 
was  about  to  show  a  marked  increase,  the  market  value  of  real  estate 
had  been  reduced  to  the  lowest  point  in  years.  Foreclosure  proceedings 
affecting  a  considerable  proportion  of  the  property  in  the  central  busi- 
ness district  of  Chicago  had  run  their  course  by  1878  and  1879.  Before 
this  process  of  judicial  liquidation  had  been  completed,  the  transfer  of 
the  properties  in  litigation  was  very  difficult  and  cumbersome.  In 
addition  to  the  title-holder's  equity,  there  were  mortgages  due  or  soon 
to  become  due  which  anyone  buying  the  property  had  to  be  prepared 
to  meet  in  full.  Now  that  the  former  owner's  equity  was  wiped  out  and 
the  title  vested  in  the  holder  of  the  mortgage,  the  property  was  free  and 
clear  of  all  incumbrances.  When  insurance  companies  owned  such 
property  they  were  ready  to  sell  it  for  the  amount  of  the  mortgage  plus 
interest  and  expenses.  Thus  capitalists  with  surplus  funds  for  invest- 
ments found  bargains  in  real  estate  that  would  net  them  from  7  to  15 
per  cent  on  their  investments  even  at  the  low  rentals  of  1878  and  1879. 
This  high  return  was  entirely  consistent  with  safety,  for  the  insurance 
companies  which  had  loaned  their  money  on  Chicago  property  in  the 
boom  of  1872  finally  reported  that  they  had  received  all  their  money 
back,  with  interest,  from  the  proceeds  of  foreclosure  sales. 

Thus  as  soon  as  there  were  surplus  funds  available  for  investment, 
bargains  in  Chicago  real  estate  were  present  to  attract  them.  In  addi- 
tion to  the  demand  for  income-yielding  property,  there  arose  from 
several  sources  demands  for  vacant  ground  for  actual  use.  Business 
men  who  had  reaped  profits  in  the  rise  of  stocks  or  commodities  desired 
palatial  homes  which  required  the  purchase  of  boulevard  lots.  Like- 
wise, mechanics  and  laborers,  whose  recent  experiences  led  them  to 
distrust  savings  banks,  invested  part  of  their  savings  in  homesites. 
Finally,  the  growth  of  railroads  and  manufacturing  establishments 
gave  rise  to  a  demand  for  ground  for  rights  of  way  and  factory  build- 
ings. 


i3 2  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

The  theory  as  to  how  improved  business  conditions  finally  affected 
real  estate  was  thus  stated  in  1881  by  E.  H.  Ludlow,  who  was  at  that 
time  the  oldest  real  estate  broker  in  New  York  City: 

Good  crops  and  business  activity  call  for  larger  stores  and  warehouses  and  the 
rise  in  rents  of  such  buildings  increases  their  value.  Then  the  men  engaged  in  busi- 
ness want,  as  they  make  money,  to  live  better,  to  move  from  small  houses  in  down- 
town streets  into  their  own  houses  in  more  fashionable  locations.  This  makes  a  de- 
mand first  for  small  up-town  residences,  then  for  larger  ones,  then  for  palaces.  This 
starts  the  builders  and  their  demand  for  vacant  land  increases  the  price  for  vacant 
land  where  the  street  improvements  are  completed,  and  this  finally  starts  the  value 
of  land  not  yet  ready  for  building  and  speculation  follows. 

The  flow  of  the  surplus  profits  of  industry  and  trade  into  Chicago 
real  estate  for  actual  use  and  as  the  most  attractive  form  of  investment 
of  funds  was  the  first  phase  in  the  recovery  of  Chicago  land  values  after 
the  depression  of  1877.  The  purchase  and  removal  from  the  market  of 
the  most  attractive  offerings  of  central  business  property  had  the  effect 
of  raising  land  values  to  the  level  of  the  lowest  asking  prices  of  the 
owners  who  had  not  been  forced  to  sell.  After  the  chaotic  and  confused 
conditions  of  1877,  in  which  there  was  hardly  a  market  for  real  estate 
at  any  price,  there  developed  a  cash  market  for  "bargains"  from  1878  to 
1880.  After  the  bargains  resulting  from  foreclosure  sales  had  been  dis- 
posed of,  a  market  developed  from  1881  to  1883  with  a  narrower  range 
between  bid  and  asked  prices  and  fewer  discrepancies  between  prop- 
erties in  similar  income  classes  or  in  similar  locations. 

B.   THE  SPECIFIC  METHODS  OF  RECOVERY  OF  CHICAGO  LAND 
VALUES,  1878  TO  1883 

The  general  forces  already  discussed  by  no  means  diffused  them- 
selves evenly  over  the  Chicago  land  area,  but  their  influence  was  con- 
centrated on  certain  spots,  producing  increases  in  land  values  in  the 
favored  localities  and  passing  by  other  sections  altogether.  To  discuss 
the  specific  mode  of  operation  of  this  recovery  in  land  values  it  is  ac- 
cordingly necessary  to  skip  from  point  to  point  and  to  consider  (i)  the 
picking-up  of  bargains  in  the  central  business  district,  (2)  the  rise  in 
values  on  Michigan  Boulevard,  (3)  the  "resurrection"  of  South 
Chicago,  (4)  Pullman,  (5)  the  boom  in  the  new  Board  of  Trade  quarter, 
and  (6)  the  growth  of  Hyde  Park,  Englewood,  and  the  outer  edges  of 
the  North  and  West  sides. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR     133 

1.  Bargains  in  the  central  business  district,  1879-80. — The  purchase 
of  land  on  Michigan  Avenue  from  Jackson  Street  to  Washington 
Street  at  from  $200  to  $250  a  front  foot  in  1879,®  or  75  per  cent  less  than 
the  values  of  1873,  would  seem  to  be  no  evidence  of  a  recovery  in  land 
values.  Sales  made  in  1879  at  the  rate  of  $333  to  $400  a  front  foot  on 
Wabash  Avenue  from  Jackson  to  Monroe  Street,  of  the  corner  of  State 
and  Madison  at  $1,150  a  foot,  and  of  the  corner  of  Adams  and  Wells  at 
$ 2  50  a  front  foot  were  lower  than  any  recorded  since  1 8 73 .9  The  very  fact 
that  sales  were  made,  however,  is  an  indication  of  improvement,  as  in 
the  worst  period  of  the  depression  in  1877  scarcely  any  property  could 
be  sold,  so  that  the  worst  depths  of  the  depression  could  not  be  meas- 
ured. The  effect  of  purchasing  and  taking  from  the  market  the  greatest 
bargains  was  to  raise  the  level  of  values  to  the  next  lowest  stratum  of 
offers. 

2.  The  boom  on  Michigan  Boulevard,  1880. — The  parade  of  fashion- 
able carriages,  the  feminine  occupants  of  which  were  taking  the  oppor- 
tunity to  show  off  their  expensive  gowns  and  jewelry,  proceeding  slowly 
down  the  boulevards  to  the  south  parks  and  the  Washington  Park  race 
track,  was  a  marked  feature  of  social  life  in  the  eighties.  On  one  summer 
afternoon  in  1881,  4,700  carriages  moved  south  on  Grand  Boulevard.10 
Consequently  when  Michigan  Avenue  was  made  a  boulevard  in  1880 
from  Jackson  Street  to  Thirty-fifth  Street,  it  became  the  cynosure  of 
all  eyes.   The  Stock  Yards  magnates,  who  had  prospered  even  during 
the  depression  of  the  seventies,  found  it  a  most  convenient  place  to  live. 
The  bidding  for  Michigan  Boulevard  lots  for  fashionable  homesites  by 
1 88 1  sent  up  the  front-foot  values  south  of  Twenty-sixth  Street  to 
higher  prices  than  had  been  reached  in  the  boom  of  1873.  The  corner 
of  Twenty-ninth  and  Michigan  Avenue,  for  instance,  which  had  sold  for 
$330  a  foot  in  1874,"  and  dropped  to  $200  a  foot  in  1879,"  had  been  bid 
up  to  $500  a  foot  in  1 88 1  and  $600  a  foot  in  i883,13  while  sales  of  inside 
frontage  from  Twenty-second  Street  to  Thirty-seventh  Street  were 
being  made  at  from  $250  to  $400  a  foot  in  i88i.14 

While  Michigan  Boulevard  was  thus  rising  in  the  social  scale,  Potter 

8  Chicago  Tribune,  June  18,  1879. 

9  Ibid.,  September  28,  1879;  October  17,  1879. 

10  Real  Estate  and  Building  Journal,  May  12,  1883. 

11  Chicago  Tribune,  December  20,  1874. 

12  Ibid.,  April  5,  1879.  I3  Ibid.  '<  Ibid. 


i34  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

Palmer,  in  1882,  was  filling  in  a  frog  pond  on  the  North  Side  and  plan- 
ning in  1884  to  erect  a  mansion  costing  $250,000  on  what  was  soon  to 
be  known  as  the  Lake  Shore  Drive.  The  conversion  of  Washington 
Street  into  a  boulevard  west  of  Ashland  Avenue  had  doubled  its 
value.  Prairie  Avenue  near  Eighteenth  Street,  the  home  of  the  great 
financial  and  social  leaders  of  Chicago,  Marshall  Field,  Philip  Armour, 
and  George  Pullman,  still  held  the  hegemony,  as  land  near  its  $200,- 
ooo  mansions  reached  a  new  high  level  of  $700  a  foot  in  1882;  but 
its  supremacy  was  already  being  threatened. 

3.  The  "resurrection"  of  South  Chicago ,  1879-83. — The  possibilities 
of  South  Chicago  and  the  Calumet  region,  first,  as  a  canal  and  shipping 
center,  and,  second,  as  a  great  railroad  and  manufacturing  center,  had 
produced  booms  in  that  territory  in  1836  and  in  1873.  Nothing  had 
been  done  in  1836  except  to  plat  a  townsite  that  was  later  vacated;  but 
in  the  boom  of  1873,  a  harbor  and  docks  had  been  constructed,  the 
Baltimore  and  Ohio  shops  erected  (1874),  and  a  number  of  small  in- 
dustries and  lumber  yards  had  been  induced  to  locate  on  the  Calumet 
River.  The  revival  of  railroad-building  suddenly  gave  new  life  to  these 
old  plans.  The  Chicago  and  Western  Indiana  railroad  (or  its  corporate 
predecessors)  was  a  short  line  that  succeeded  in  forcing  its  way  from  the 
Indiana  state  line  to  Polk  and  Dearborn  streets  in  Chicago;  and  this 
new  line  provided  terminal  facilities  in  the  central  business  district  for 
four  new  trunk  railroads  in  the  period  from  1880  to  1882,  namely,  the 
Grand  Trunk  (1880),  the  Chicago  and  Eastern  Illinois  (1881),  the 
Chicago,  Indiana,  and  Louisville  (1882),  and  the  Erie  (1882).  The  en- 
try of  these  new  lines  through  the  Calumet  region,  and  the  entry  of 
three  other  trunk  lines,  making  a  total  of  seven  trunk  lines  from  1880 
to  1882,  stimulated  plans  for  a  belt-line  railroad  that  would  begin  at 
East  Chicago,  Indiana,  and  circle  Chicago.  The  wealth  of  transporta- 
tion facilities  in  South  Chicago  and  its  strategic  location  as  a  meeting 
place  of  lake-borne  iron  ore  and  railroad-shipped  coal  from  Illinois 
mines  induced  two  large  rolling  mills  to  locate  in  South  Chicago  in 
1880.  In  1 88 1  the  Calumet  and  Chicago  Canal  and  Dock  Company, 
which  owned  6,000  acres  in  the  South  Chicago  region,  but  was  unable 
to  sell  small  tracts  because  of  a  $2,000,000  blanket  mortgage  which 
covered  its  entire  holding,  succeeded  in  paying  off  this  mortgage  by 
a  sale  of  preferred  stock.  Its  land  was  then  put  on  the  market  in  what- 
ever sized  tracts  were  desired  for  actual  use.  The  Chicago  Belt  Line 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR     135 

Company,  organized  to  build  a  great  belt  line  around  Chicago  and  with 
plans  for  a  manufacturing  city,  bought  the  Forsythe  tract  of  8,000 
acres  around  the  present  site  of  East  Chicago  for  $1,000,000,  one- third 
of  which  was  paid  down.15  These  schemes  naturally  had  the  effect  of 
stimulating  speculation  in  acre  tracts  throughout  the  Calumet  region 
in  1881  and  1882  until  some  tracts  were  held  as  high  as  $1,000  an  acre. 
But  the  belt-line  scheme  collapsed  and  the  Forsythes  took  back  their 
tract  of  land.  This  put  a  damper  on  the  option  trading  and  the  specula- 
tive fever.  A  solid  and  substantial  growth  nevertheless  continued.  The 
United  States  Rolling  Stock  Company  founded  the  town  of  Hegewisch 
in  1883.  By  1883  the  South  Chicago  region,  including  Hegewisch  and 
Pullman,  which  had  less  than  2,000  population  in  1880,  had,  as  a  result 
of  the  location  of  these  new  industries,  a  population  of  16,000. 

4.  Pullman. — George  Pullman,  deciding  in  1880  to  locate  his  great 
carworks  near  Chicago,  was  followed  wherever  he  went  by  a  crowd  of 
brokers  and  newspaper  men,  but  he  threw  them  off  the  scent  by  pub- 
licly inspecting  land  near  Austin,  while  secretly  buying  3,500  acres  of 
land  near  One  Hundred  and  Eleventh  Street  and  Lake  Calumet  at 
from  $75  to  $200  an  acre.  In  1883,  after  the  new  works  had  been  built, 
this  land  had  risen  in  value  to  from  $1,000  to  $3,000  an  acre.  The 
model  town  of  Pullman,  with  its  own  gasworks,  waterworks,  and  sew- 
age disposal  plant,  was  then,  as  it  still  is,  an  independent  center  in  the 
Chicago  area,  being  surrounded  on  all  sides  by  vacant  land  of  lower 
value. 

5.  The  boom  in  the  new  Board  of  Trade  Quarter. — The  decision  of  the 
Board  of  Trade  in  1881  to  move  from  the  corner  of  LaSalle  and  Wash- 
ington streets  to  a  neglected  section  left  vacant  since  the  great  fire  of 
1871  in  the  vicinity  of  Jackson  and  LaSalle  streets  had  the  effect  of 
shifting  the  financial  center  of  Chicago  to  the  new  region.  From  1881 
to  1883  the  value  of  land  on  Jackson,  Van  Buren,  Wells,  and  LaSalle 
streets  near  the  Board  of  Trade  advanced  from  $200  and  $400  a  front 
foot  to  from  $1,500  to  $2,000  a  front  foot,  and  the  value  of  land  on  some 
of  the  side  streets,  like  Sherman  and  Pacific,  increased  in  an  even  great- 
er ratio,  from  less  than  $200  to  over  $2,000  a  front  foot.16  In  this  new 
quarter  the  best  office  buildings  in  the  city  were  constructed  from  1883 

15  Real  Estate  and  Building  Journal,  August  28,  1881.  Where  there  had  not  been  a  single 
house  in  1880,  there  were  1,000  houses  and  a  population  of  5,000  in  1882. 

16  Chicago  Tribune,  July  23,  1881. 


136  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

to  1885.  Among  the  new  buildings,  with  a  total  value  of  $7,000,000, 
were  heavy  stone  and  masonry  structures  nine  stories  high.  One  of 
them,  the  Home  Insurance  Building  at  the  corner  of  Adams  and 
LaSalle  streets,  erected  in  1885,  has  lately  been  pronounced  to  be  the 
first  steel  skeleton  skyscraper,  although  it  did  not  embrace  all  the  fea- 
tures of  such  construction.17  The  era  of  the  "skyscraper"  had  not  quite 
arrived  by  1885,  however,  for  the  tenants  avoided  the  upper  stories  of 
the  new  buildings  and  revolutionary  significance  of  the  tall  building  was 
not  yet  realized. 

The  total  increase  in  the  value  of  land  and  buildings  within  half  a 
mile  from  the  Board  of  Trade  from  1881  to  1885  was  estimated  by  cur- 
rent observers  at  from  $20,000,000  to  $40,000,000.  To  offset  this  gain, 
however,  there  was  a  temporary  decline  in  the  rents  and  the  land  values 
of  the  old  quarter  at  Washington  and  LaSalle  that  had  been  abandoned 
by  the  Board  of  Trade.  The  exodus  from  the  old  section  was  caused  not 
merely  by  the  desire  to  follow  the  Board  of  Trade,  but  by  the  superior 
type  of  officers  and  the  better  elevator  service  offered  in  the  new  finan- 
cial center. 

6.  The  "flat  craze"— From  1881  to  1883  the  tendency  to  live  in 
apartments  began  to  grow  so  rapidly  that  it  was  called  the  "flat  fever" 
or  the  "flat  craze."  In  1883,  1,142  flat  buldings,  many  of  them  poorly 
constructed,  divided  into  two  parts  with  a  front  parlor  and  a  rear 
consisting  of  darkened  rooms  and  a  kitchen,  were  built.18  Some  of  the 
better  ones  had  steam  heat,  gas  light,  and  porcelain  bath  tubs.  While 
these  flat  buildings  were  attacked  on  the  ground  that  the  noises  of 
neighboring  apartments  could  be  heard  throughout  the  entire  building, 
and  that  they  were  lacking  in  light,  air,  and  yard  space,  they  appealed 
to  many  housewives  because  of  the  convenience  of  living  on  one  floor, 
the  fewer  servants  and  less  furniture  required,  and  the  comfort  of  hav- 
ing the  furnace  cared  for  by  the  janitor.  At  any  rate,  flats  were  profit- 
able to  their  early  builders  as  they  yielded  10  per  cent  net  on  the  invest- 
ment. Their  coming  signified  a  more  intensive  use  of  residential  land 
and  made  possible  a  higher  value  for  it.  The  invasion  of  fashionable 
residential  districts  by  the  apartment  building,  however,  lowered  the 
value  of  such  districts  for  high-grade  homes,  and  property  owners  in 
such  sections  frequently  made  private  agreements  to  exclude  them. 
The  first  apartments  were  built  along  car-line  streets  like  Cottage 
id.,  October  28,  1883.  '*  Ibid.,  December  9,  1883. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    137 

Grove  Avenue,  or  on  parts  of  fashionable  residential  streets  that  had 
begun  to  decline,  or  on  medium  residential  streets  that  were  in  close 
proximity  to  fine  homes. 

7.  Growth  of  the  outer  edges  of  Chicago. — Outside  the  city  limits  of  the 
Chicago  of  1880,  but  within  the  present  city  limits  or  adjacent  to  them, 
were  sixty  suburban  towns,  and  villages  with  populations  ranging  from 
500  to  2,000  at  that  time.  The  feature  of  the  decade  from  1880  to  1890 
was  the  rapid  growth  of  these  small  centers,  as  well  as  the  growth  of  the 
city  outward  south  of  Thirty-ninth  Street,  west  of  Western  Avenue  to 
the  West  Side  parks,  and  north  of  North  Avenue  until  many  of  these 
independent  centers  became  merged  in  a  continuous  line  of  settlement. 

Of  all  sections,  however,  the  growth  of  the  South  Side  in  population 
and  land  values  was  most  marked.  Its  transportation  facilities  to  the 
downtown  business  district  were  far  superior  to  those  of  the  North  or 
West  sides.  It  was  not  handicapped  by  the  opening  and  closing  of  the 
bridges  over  the  Chicago  River,  which  delayed  traffic  crossing  the  river 
so  frequently  as  to  be  a  source  of  constant  complaint.  It  not  only  had 
the  best  suburban  railway  service  in  the  Illinois  Central,  the  Rock 
Island,  and  the  Michigan  Southern,  but  to  this  group  was  added  the 
Chicago  and  Eastern  Illinois  in  1881.  Its  horse-car  lines  had  been  the 
most  numerous  and  had  provided  the  fastest  service,  yet  in  1882  its 
trunk  State  Street  and  Cottage  Grove  Avenue  car  lines  were  converted 
into  cable  lines  as  far  south  as  Thirty-ninth  Street,  with  the  result  that 
it  required  no  more  time  to  go  to  Thirty-ninth  Street  than  was  formerly 
needed  to  reach  Twenty-second  Street.  In  addition  to  these  advantages 
of  quick  transit,  there  was  the  appeal  of  the  fashionable  avenues  that 
led  out  to  aristocratic  Kenwood  and  Hyde  Park  and  the  great  South 
Park  system.  The  way  to  the  better  residential  districts  of  the  West 
Side  lay  through  a  rough  and  turbulent  quarter  teeming  with  uncouth 
foreigners,  while  the  South  Side  east  of  State  Street  presented  an  invit- 
ing aspect  all  the  way  from  the  downtown  district  to  the  parks. 
Furthermore,  the  effect  of  the  rapid  growth  of  Pullman,  South  Chicago, 
and  Hegewisch  as  industrial  centers  exerted  a  pull  toward  the  South. 
Thus  the  boom  on  Michigan  Avenue,  at  Pullman,  and  at  South  Chicago 
diffused  itself  over  wider  areas  of  the  South  Side.  Stores  and  apart- 
ment buildings  in  considerable  number  were  constructed  along  the 
Cottage  Grove  and  State  Street  cable  lines  in  the  eighties  and  land 
values  on  these  streets  had  doubled  by  1883.  Kenwood  and  Hyde  Park 


138  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

were  pushing  north  and  south.  Englewood  was  growing  fast,  and  its 
business  center  was  shifting  from  Wentworth  Avenue  to  Sixty-third 
Street.  Woodlawn  at  Sixty-third  Street  and  the  Illinois  Central  tracks, 
a  country  hamlet  in  1880,  was  beginning  to  acquire  stores  and  houses. 
The  population  of  the  twenty  separate  communities  in  the  48-square- 
mile  village  of  Hyde  Park  increased  from  15,000  in  1880  to  45,000  in 
1883." 

8.  Review  of  the  rise  in  land  values  in  the  Chicago  area,  1878-83. — The 
accumulation  of  new  capital  from  the  profits  of  trade  had  been  invested 
first  in  1879  and  1880  in  "bargains"  in  central  business  property,  offered 
as  a  result  of  foreclosure  proceedings,  and  then  in  homesites  for  actual 
use  along  the  boulevards.  Purchases  of  land  for  railroad  yards  and 
rights  of  way  and  for  new  manufacturing  centers  had  caused  a  remark- 
able increase  in  land  values  in  a  few  locations  by  1881.  The  shifting  of 
the  Board  of  Trade  to  new  quarters  had  caused  a  sensational  advance 
in  the  southwest  corner  of  the  downtown  area.  The  purchase  of  home- 
sites  by  laborers  and  speculative  purchases  had  diffused  the  advances 
that  had  begun  in  a  few  spots  over  a  wider  area.  By  1883  Chicago  land 
values  had  been  stabilized  on  a  basis  that  on  the  average  was  thought 
to  be  approximately  equal  to  the  peak  prices  of  1873  for  land  within  the 
city  limits,  with  an  average  recovery  of  about  40  per  cent  in  value  from 
the  depression  of  1877.  It  was  admitted  that  the  value  of  suburban 
lands,  except  in  a  few  favored  localities,  was  still  far  below  the  prices  of 
ten  years  before.  In  fact,  within  the  old  city  itself,  while  there  were 
some  sections,  as  in  the  case  of  Michigan  Boulevard,  the  new  Board  of 
Trade  quarters,  and  portions  of  the  South  and  North  sides,  where  the 
land  values  of  1883  exceeded  the  1873  peaks,  there  were  other  sections 
that  had  deteriorated.  In  particular,  that  part  of  the  West  Side  from 
Fulton  to  Madison  Street,  west  of  Halsted  Street  to  Ashland  Avenue, 
was  on  the  downgrade  because  of  its  poor  improvements  and  its  non- 
descript population.  The  northern  and  eastern  parts  of  the  central 
business  district  had  not  recovered  the  values  of  1873.  The  favorite 
scenes  of  speculation  of  the  decade  before — the  land  near  the  south  and 
west  parks — still  languished  dismally. 

Real  estate  brokers  and  landowners  in  1883,  however,  were  disposed 
to  view  the  situation  with  equanimity.  After  all  the  storms  they  had 
passed  through  and  after  all  the  gyrations  of  land  values  it  seemed  that 

19  Ibid.,  January  6,  1884. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    139 

values  had  reached  a  normal  level.  Some  seventeen  hundred  of  the 
obsolete  types  of  houses  were  vacant;  there  was  an  oversupply  of  the 
poorer  types  of  flats;  the  purchasers  of  suburban  lots  and  acres  had 
been  taught  a  lesson  they  would  not  soon  forget,  and  most  of  the  own- 
ers of  downtown  business  property  who  had  mortgaged  it  heavily  to 
erect  a  fine  building  in  1872  now  possessed  neither  land  nor  buildings. 
The  new  owners  found  the  situation  satisfactory.  Most  property  was 
clear  of  all  incumbrances.  The  interest  rate  on  the  best  mortgages  had 
fallen  to  5  per  cent  by  i88i.20  The  best  income  property  yielded  10-30 
per  cent  net  on  the  investment.  Under  no  pressure  to  sell,  these  holders 
could  view  the  extreme  fluctuations  of  the  last  ten  years  as  evidence  of 
mental  disturbances  which  would  be  avoided  as  men  learned  the  true 
principles  of  land  valuation.  Thus  the  editor  of  the  Real  Estate  and 
Building  Journal  described  the  past: 

Real  estate  has  had  for  the  past  decade  a  fitful  history — the  feeling  changing 
from  dismay  amid  the  ash  heaps  to  furious  speculation  and  back  again  [to  dismay], 
then  softening  into  apprehension,  then  into  half  belief  and  finally  into  full  confi- 
dence. Any  individual  who  should  successively  exhibit  these  grades  of  feeling  with 
half  the  force  with  which  they  were  felt  by  the  public  at  large  would  be  sent  to  a 
lunatic  asylum.  During  the  prevalence  of  them  real  estate  went  to  the  bow-wows. 
But  as  the  land  itself  remained  fixed,  without  a  change  of  countenance  (except  for 
the  better  in  its  improvement  by  buildings  and  lawns)  the  market  worked  around 
all  right  again.  We  are  of  the  opinion  that  it  is  more  than  a  lucid  interval.  It  is  a 
graduation  to  fixed  and  downright  common  sense  in  land  dealing  and  history  has 
made  a  good  deal  of  literature  which  can  be  profitably  used  as  a  text  for  dealers  to 
consult  in  the  future.21 

Again  he  comments  on  the  return  to  normal: 

If  the  statistics  were  published  of  the  rise  and  downfall  of  prices  and  their  latest 
return  to  a  just  value,  a  panorama  of  the  emotions  and  acts  it  caused  would  prove 
perplexing  but  interesting.  There  would  be  found  a  good  deal  of  romance,  consider- 
able fiction,  something  of  libel,  immensity  of  imagination,  bottomless  depths  of 
despondency,  astronomic  altitudes  of  enthusiasm  and  general  derangement  of  sys- 
tem and  precedent.22 

During  this  period  of  "stability,"  in  the  latter  part  of  1882,  Mr.  J.  G. 
Cozzens  of  the  Citizens'  Association,  after  a  tabulation  of  sales  of  land 
in  all  parts  of  the  city,  concluded  that  the  average  value  of  the  121,002 
lots  in  the  city  limits  was  $3,168  or  a  total  value  of  $383,328,000  for  all 

20  Ibid.,  August  13,  1881. 

21  Real  Estate  and  Building  Journal,  November  20,  1880. 

22  Ibid.,  November  13,  1880. 


140 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


the  land  within  the  city  limits.23  This  would  indicate  at  least  a  full  re- 
covery of  land  values  within  the  city  limits  to  the  peak  values  of  1873, 
if  contrasted  with  the  writer's  own  estimate  of  $360,000,000  for  the 
same  area  in  1873.  The  recovery  in  land  values  outside  the  city  limits 
of  1883  and  inside  the  present  city  limits  had  not  exceeded  50  per  cent 

TABLE  V 

VALUE  OF  CHICAGO  LAND  BY  PRINCIPAL  USES,  1876-83 
(In  Dollars  per  Front  Foot) 


DATE 

CLASS  OF  PROPERTY 

Jan.  i, 

1876 

Jan.  i, 
1879 

Jan.  i, 
1883 

SAMPLE  LOCATION 
(STREETS) 

First-class  retail 

$2    OOO 

$i  t;oo 

$3    OOO 

State 

Banks  and  offices  
Wholesale  business  
Second-class  retail  
Local  business  

1,250 
700 
500 

400 

1,100 

600 
400 
300 

2,000 
1,500 
600 
4OO 

LaSalle,  Washington 
Wabash,  Franklin 
N.  Clark,  W.  Madison 
Twenty-second 

Local  business  

2OO 

i  ^o 

2  SO 

Cottage  Grove,  Thirty-fifth, 

Aristocratic  residence  

3"?o 

250 

600 

Thirty-ninth 
Michigan,  Prairie,   Calumet 

First-class  residence 

2OO 

200 

3OO 

Dearborn,  Indiana 

First-class  residence,  West  Side 

150 

2OO 

Ashland,  Washington 

First-class  residence,  3  miles 
out             

ICQ 

I<O 

ISO 

Avenues  near  Twenty-ninth 

First-class  residence,  3^  miles 
out   

I2<? 

I2< 

I2< 

Avenues  near  Thirty-first 

First-class  residence,  4  miles 
out  

IOO 

QO 

IOO 

Avenues  near  Thirty-fifth 

First-class  residence,  4^  miles 
out 

QO 

7c 

8C 

Langley,  Vincennes 

Medium  residence          .    .  . 

6S 

CO 

65 

All  divisions 

Mechanics'  residences     .... 

CO 

40 

CO 

All  divisions 

Laborers'  residences  
Laborers'  cheap  residences.  .  . 
Fashionable  suburban  
Genteel  suburban  

30 

12 
60 
2O 

2O 
IO 

45 
15 

40 
20 
60 

3° 

All  divisions 
All  divisions 
Hyde  Park,  Evanston 
Englewood 

of  the  1873  values,  and  the  total  value  of  this  outer  belt  was  not  over 
$100,000,000  in  1883.  The  total  land  value  of  the  area  within  the 
present  city  limits  of  Chicago  was  therefore  approximately  $485,000,000 
in  1883  as  compared  with  $5 7 5, 000,000  in  1873.  The  value  of  different 
types  of  property  per  front  foot  at  the  beginning  of  1883  was  indicated 
as  shown  in  Table  V  by  Frank  R.  Chandler.24 

23  Ibid.,  September  30,  1882. 
**  Ibid.,  January,  1883. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    141 

C.  THE  PERIOD  FROM  1884  TO  1 886 

The  recession  in  general  business  activity  in  1883. — The  upward 
movement  in  the  volume  of  production  and  in  wholesale  prices  that 
had  been  in  progress  since  1879  was  checked  in  1883  when  a  reverse 
movement  began.  The  prices  of  staple  commodities  like  wheat  and  pig 
iron  declined.  The  value  of  the  145  most  active  stocks  on  the  New 
York  Stock  market — mostly  railroad  securities — fell  from  three  to  two 
billion  dollars  during  i883.2S  Thousands  of  "lambs"  who  had  been 
dabbling  in  stocks  lost  their  small  savings.  New  railroad  construction 
was  sharply  contracted. 

The  effect  on  Chicago  trade  and  manufactures  was  shown  by  the 
decline  in  the  number  employed  in  manufactures  from  114,457  in  J^^3 
to  105,725  in  1884  and  in  the  fall  in  the  combined  value  of  manufac- 
tures, wholesale,  and  produce  trade  from  $1,050,000,000  in  1883  to 
$933,000,000  in  i884.26 

The  effect  on  the  real  estate  market  of  this  recession  in  general  busi- 
ness activity  was  to  check  any  further  advance  in  house  and  store 
rents,  which  had  climbed  steadily  from  1879  to  1882,  and  to  put  a 
damper  for  the  time  on  any  further  upward  tendencies  in  land  values. 
Labor  troubles  also  seemed  to  furnish  a  disquieting  element.  A  brick- 
layers' strike  in  the  spring  of  1883  slightly  checked  building  activity. 
The  more  serious  Haymarket  riot  of  1886  evoked  considerable  mistrust 
among  eastern  capitalists. 

The  volume  of  real  estate  sales  and  of  new  construction  dropped  only 
slightly  in  1884,  however,  and  during  the  sharp  decline  that  occurred  in 
commodities  and  stocks.  Chicago  land  values  remained  firm  without 
any  recorded  decline.  The  real  estate  market,  while  sensitive  to  chang- 
ing business  conditions,  does  not  fluctuate  as  rapidly  as  the  more  vola- 
tile stocks. 

While  land  booms  were  being  generated  in  Los  Angeles,  Seattle, 
Kansas  City,  Omaha,  Duluth,  Minneapolis,  and  many  other  cities 
which  reached  their  peaks  in  1887,  the  Chicago  land  market  was  slowly 
increasing  its  volume  as  the  result  of  a  steady  growth  of  population  and 
a  continuous  demand  for  lots  on  the  edge  of  the  built-up  area.  There 
were  few  evidences  of  speculation  and  only  moderate  increases  in  land 
values  during  this  quiet  period. 

2S  Chicago  Tribune,  January  i,  1884. 

2(>Ibid.,  January  i,  1885;  Industrial  Chicago,  III,  194. 


142  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

D.    SPECIAL  FACTORS  IN  THE  MOVEMENT  OF  CHICAGO  LAND 
VALUES  FROM  1 886  TO  1894 

The  Chicago  land  market  from  1886  to  1894  was  influenced  to  a 
remarkable  degree  by  a  series  of  special  factors,  which  will  be  discussed 
separately  for  the  sake  of  clarity,  before  their  combined  effect  is  de- 
scribed in  the  tone  and  temper  of  the  market  itself.  The  reasons  for  the 
extraordinary  growth  in  land  values  during  this  period  in  the  central 
business  district  and  the  South  Side,  while  land  values  in  the  old  inter- 
mediate residential  belt  were  stagnant  and  while  the  value  of  suburban 
acres  on  the  west  and  northwest  sides  were  rising  only  moderately,  can 
best  be  explained  by  a  consideration  of  the  following  forces:  (i)  the 
growth  of  Chicago  railroads  and  manufactures,  1886-94;  (2)  the  growth 
of  internal  transportation  systems,  1886-94;  (3)  steel-frame  skyscrap- 
ers, 1885-94;  (4)  annexation,  1889;  (5)  the  World's  Columbian  Exposi- 
tion, 1887-94;  and  (6)  department  stores  and  apartments. 

i.  The  growth  of  Chicago  railroads  and  manufactures,  1886-94. — 
From  1886  to  1889,  inclusive,  five  trunk  railroad  lines — the  Wisconsin 
Central  (1886),  the  Sante  Fe  (1887),  the  Chicago  Great  Western  (1887), 
the  Illinois  Central  (West)  (1888),  and  the  Cleveland,  Cincinnati, 
Chicago  and  St.  Louis  (Big  Four)  (1889)— entered  Chicago.87  In  the 
two  decades  from  1870  to  1890  the  mileage  of  railroads  entering 
Chicago  had  increased  370  per  cent;  their  tonnage  490  per  cent.  These 
railroads  affected  land  values  in  a  variety  of  ways.  First,  their  direct 
demand  for  land  for  rights  of  way,  freight  yards,  shops,  and  terminals 
gave  a  cash  value  to  some  land  that  had  long  lain  dormant,  and  changed 
the  character  of  the  use  of  other  tracts.  Thus  the  purchase  of  land  for 
freight  yards  by  the  Santa  Fe  in  1887  doubled  the  value  of  land  in  the 
vicinity  of  Thirty-fifth  and  Central  Park  Avenue,  and  its  purchase  of 
land  along  State  Street  from  Sixteenth  to  Polk  Street,  to  gain  addition- 
al terminal  facilities,  completed  the  conversion  of  that  old  vice  and 
slum  area  into  railroad  land.  It  thereby  hastened  the  shift  of  the  vice 
area  southward.  Second,  new  railroads  furnishing  a  suburban  service 
greatly  increased  the  value  of  land  along  that  portion  of  their  route 
that  was  within  commuting  distance  from  the  city.  The  building  of  the 
Wisconsin  Central  in  1886  through  the  territory  of  Douglas  Park  great- 
ly increased  the  population  and  land  values  of  that  territory  in  the 
next  few  years.  Third,  the  entry  of  so  many  railroads  into  Chicago 

37  Tan,  op.  cit. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR     143 

made  the  problem  of  transferring  freight  between  them  an  increasingly 
important  one.  To  solve  this  problem  a  plan  was  proposed  for  the  con- 
struction of  a  great  clearing  yard  on  a  i,2oo-acre  tract  about  10  miles 
southwest  of  the  city.  The  land  in  this  so-called  Stickney  tract  was 
purchased  by  a  syndicate  in  1887.  Nothing  was  actually  done  on  this 
project  during  the  period  under  discussion  (1887-94),  but  its  existence 
led  to  many  rumors  and  the  possibilities  of  its  exploitation  as  a  site  for 
factories,  mills,  and  packing  plants  was  the  chief  cause  of  wild  specula- 
tion in  acre  tracts  in  that  vicinity  in  1889  and  1890.  In  addition  to  the 
Stickney  plan,  many  other  belt-line  projects  were  formulated  in  this 
period.  These  belt  lines  were  usually  projected  to  start  at  the  lake 
front  in  the  Calumet  region  and  to  swing  from  thence  in  a  circle  around 
Chicago.  The  Chicago  and  Calumet  Terminal  Railroad  was  organized 
on  July  2,  1886,  and  the  Elgin,  Joliet  and  Eastern  Railroad,  the  outer 
belt,  was  chartered  on  March  18,  1887.  The  latter  road  traced  a  wide 
arc  around  Chicago  passing  through  Porter,  Dyer,  Joliet,  and  Wauke- 
gan.  Fourth,  the  chief  significance  of  these  belt-line  railroads  from  the 
land- value  standpoint  was  the  fact  that  they  were  linked  up  with  the 
establishment  of  new  manufacturing  projects.  At  this  time  there- was  a 
rush  of  manufacturing  concerns  to  locate  in  the  Chicago  area  to  obtain 
the  advantage  of  its  superior  terminal  facilities  and  favorable  railroad 
rates.  The  promoters  of  the  belt  lines  not  only  contracted  to  buy 
huge  tracts,  like  the  Forsythe  tract  of  8,000  acres  at  East  Chicago  and 
2,000  acres  near  Tolleston,  Indiana,  but  they  made  deals  with  the 
manufacturers  to  locate  on  sites  to  be  selected  by  them.  Farm  land  far 
from  any  transportation  was  bought  at  farm-land  prices,  belt  lines 
projected  through  the  site  selected,  manufacturing  plants  projected 
along  the  projected  belt,  townsites  platted  and  lots  sold  to  clerks  in  the 
city.  Schemes  for  belt  lines  and  manufacturing  towns  were  one  of  the 
most  prominent  features  of  the  acre  and  lot  sales  of  1889  and  1890. 
They  contributed  toward  the  direction  of  speculative  activity  to  the 
suburbs  and  to  new  towns  as  far  as  forty  miles  from  Chicago. 

a)  The  growth  of  manufacturing. — The  growth  of  manufacturing  in 
the  Chicago  area  was  exceptional,  the  number  of  employees  and  the 
value  of  manufactured  products  almost  doubling  from  1884  to  1890,  as 
Table  VI  shows.28  The  census  figures  for  1890  are  not  strictly  compara- 
ble with  the  statistics  for  the  other  years  collected  by  local  authorities, 

28  Industrial  Chicago,  III,  194. 


144 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


as  the  census  figures  included  many  small  firms  not  previously  counted. 
A  peak  was  unquestionably  reached  in  1890,  however,  that  was  higher 
than  the  returns  for  1891,  even  with  the  products  of  small  firms  de- 
ducted. The  rapid  increase  in  the  number  employed  and  the  wages 
paid  from  1885  to  1890  as  indicated  by  Table  VI  accounts  to  a  great 
extent  for  the  rapid  increase  in  "cheap"  lot  sales  in  this  period,  for 
it  is  when  workers  are  fully  employed  that  they  accumulate  small  sur- 
plus funds  for  investment. 

TABLE  VI 

CHICAGO  MANUFACTURES  1884-93,  SHOWING  NUMBER  OF 

WAGE-EARNERS,  AMOUNT  OF  WAGES  PAID,  AND 

VALUE  OF  PRODUCT 


Year 

No.  Employed 
in  Manufactures 

Wages  Paid 
(Millions  of 
Dollars) 

Value  of 
Product  (Millions 
of  Dollars) 

1884 

IQC  ,  72? 

$  48   I 

$292.2 

i88<; 

IOQ,62< 

51  .  2 

316.9 

1886               

126,4.^0 

67.7 

349-  7 

1887 

134,  6l«5 

74.6 

403.  i 

1-888  

132  ,016 

73.4 

4OI  .2 

1889... 

151,070 

84.5 

452.  2 

1890 

2IO   336 

124  O 

664.6 

1891 

180,870 

IO4  O 

^67  .0 

1802 

186,085 

114.  3 

586.3 

180? 

171  ,  7OO 

99.  2 

574-5 

2.  Internal  transportation,  1887-94. — A  succession  of  devices  for 
faster  means  of  local  transportation  followed  each  other  rapidly  in  this 
period,  enabling  people  to  skip  the  intermediate  areas  partially  filled 
with  obsolete  houses  occupied  by  the  poorer  classes  and  seek  homesites 
where  the  houses  were  new  and  the  neighborhood  had  not  acquired  an 
adverse  character.  These  devices  were  (i)  cable  lines,  (2)  elevated 
steam  railroads,  and  (3)  electric  surface  lines.29 

The  South  Side  again  led  the  way  until  the  end  of  this  period.  By 
1882  it  had  cables  on  its  main  trunk  lines  of  travel,  State  and  Cottage 
Grove  Avenue,  and  in  1887  before  cable  lines  had  been  put  in  operation 
on  either  the  North  or  the  West  sides,  the  State  Street  cable  was  ex- 
tended to  Sixty-third  Street  and  the  Cottage  Grove  cable  was  extended 
to  Sixty-seventh  Street,  with  a  branch  running  down  Fifty-fifth  Street 

29  See  maps  of  the  Chicago  street-car  lines  in  1891  (Fig.  24). 


MAP  OF  CHICAGO 

-  SHOWING - 


STREET  CAR  LINES  IN  1891 


LEGEND 

CABLE  LINES 
HORSE  CAR  LINES 
ELECTRIC  SURFACE  LINE 


HOMER  HOYT  FROM  DATA  rUMHMCA  BY 


FIG.  24 


i46  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

to  Lake  Park  Avenue.  To  supplement  the  cable,  horse-car  lines  on 
cross-streets  such  as  Sixty-ninth  Street  from  State  to  Ashland  Avenue, 
Twenty-sixth  Street  from  Cottage  Grove  to  Halsted,  Thirty-fifth 
Street  from  State  Street  to  the  South  Fork,  Forty-third  Street  from  the 
Illinois  Central  tracks  to  State  Street,  Forty-seventh  Street  from  State 
to  Ashland  Avenue,  Sixty-third  Street  from  Halsted  to  Ashland  Ave- 
nue, and  Vincennes  Avenue  from  Sixty-ninth  Street  to  Seventy-ninth 
Street,  were  built  from  1887  to  1889.  A  five-cent  fare  with  one  free 
transfer  to  any  cross-line  greatly  stimulated  the  settlement  and  rise 
in  value  of  the  vacant  lands  on  the  southwest  side  at  the  end  of  the 
cross-lines.  Not  satisfied  with  this  progress,  which  increased  the  speed 
on  its  main  trunk  lines  from  the  horse-car  rate  of  four  to  six  miles  an 
hour  to  the  cable-car  rate  of  nine  to  twelve  miles  an  hour,  the  South 
Side  was  the  first  to  secure  elevated  steam  transportation,  which  moved 
express  trains  at  a  speed  of  fourteen  to  fifteen  miles  an  hour.  The 
South  Side  Rapid  Transit  Company  began  to  build  its  structure  be- 
tween Twelfth  and  Thirty-ninth  Street  in  1890,  and  started  to  operate 
trains  from  Congress  Street  to  Thirty-ninth  Street  in  June,  1892.  Its 
future  course  south  of  Thirty-ninth  Street  was  decided  in  1891  to  the 
extent  that  it  would  run  in  the  alley  between  Calumet  and  Prairie 
avenues,  but  for  a  time  it  was  thought  that  its  southern  terminus  would 
be  at  Seventy-first  and  St.  Lawrence  Avenue  or  even  at  One  Hundred 
and  Eleventh  Street.  The  World's  Fair  undoubtedly  was  responsible 
for  the  decision  to  build  to  Jackson  Park.  Its  line  was  completed  south 
to  Fifty-fifth  Street  in  October,  1892,  and  by  May  i,  1893,  it  was 
finished  all  the  way  to  Jackson  Park. 

The  superiority  of  the  transportation  facilities  on  the  South  Side  and 
their  steady  improvement  in  this  period  are  among  the  chief  causes  of 
the  uninterrupted  rise  in  its  land  values  throughout  the  era  from  1882 
to  1890.  First,  along  the  routes  of  the  cable  lines — State  Street  and 
Cottage  Grove  Avenue — there  were  steady  building  and  rise  of  land 
values  during  the  eighties;  second,  along  the  horse-car  lines,  which 
acted  as  feeders  for  the  cable  lines,  values  rose  as  virgin  acre  tracts  were 
open  for  settlement;  and,  third,  along  the  route  of  the  "Alley  L"  and 
near  its  stations  on  cross-town  streets  land  values  rose  rapidly  in  this 
period.  "Transfer  corners,"  or  corners  where  two  street-car  lines  inter- 
sected, first  acquired  a  high  value  for  business  purposes,  as  the  corners 
of  Thirty-fifth  and  Thirty-ninth  and  Cottage  Grove  Avenue  and 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    147 

Thirty-first  and  Indiana  Avenue  attained  peaks  not  before  reached 
outside  the  central  business  district. 

The  North  and  West  sides  were  lagging  far  behind  the  South  Side 
at  this  time  in  transit  facilities.  They  were  both  handicapped  by  the 
bridge  evil  at  first  as  both  the  LaSalle  and  the  Washington  Street 
tunnels  were  not  kept  in  repair  for  horse-vehicle  or  pedestrian  traffic.30 
The  North  Side  improved  its  service  by  building  its  first  cable  lines  on 
Clark  Street  from  Diversey  to  the  downtown  section,  and  on  Wells 
Street  from  Illinois  Street  to  Lincoln  Park,  in  1888.  These  cable  lines 
entered  the  main  business  district  through  the  LaSalle  Street  tunnel. 
Additional  North  Side  cable  lines  were  constructed  on  Lincoln  Avenue 
from  Center  to  Fullerton  and  on  Clybourn  Avenue  from  Division  to 
Fullerton  Avenue  in  1890.  A  further  improvement  in  transportation 
was  furnished  by  the  building  of  the  Chicago  and  Evanston  Railroad 
along  the  north  shore  near  the  lake.  Land  values  along  the  North  Side 
advanced  along  the  routes  of  these  new  transit  lines,  but  the  service  of 
the  North  Side  cable,  on  account  of  frequent  breakages,  was  said  to  be 
greatly  inferior  to  that  of  the  South  Side  cable.  Furthermore,  the 
North  Side  could  not  match  the  frequent  suburban  train  service  of  the 
South  Side. 

The  West  Side  had  the  poorest  transportation  service  of  all  at  this 
time.  Its  horse-car  lines  running  east  and  west,  to  and  from  the  main 
business  district,  were  the  slowest  in  the  city,  the  Harrison  Street  line 
barely  making  four  miles  an  hour  and  cross-lines  running  north  and 
south  being  almost  wholly  lacking.  It  was  not  until  1890  that  a  cable 
line  was  completed  on  Madison  Street  from  the  downtown  area  west 
to  Crawford  Avenue.  By  1891,  however,  cable  lines  were  completed  on 
Milwaukee  to  Armitage,  and  on  Halsted  Street  and  Blue  Island  Ave- 
nue. These  cable  lines  entered  the  main  business  district  through  the 
Washington  Street  tunnel.  In  1890  an  electric  surface  line,  the  Cicero 
and  Proviso  Electric,  was  completed  from  the  end  of  the  Madison  Street 
cable  line  on  Madison  Street  to  Harlem  Avenue,  and  this  line  caused 
a  rise  in  land  values  along  its  route.  The  building  of  the  Wisconsin 
Central  Railroad  in  1886  had  raised  land  values  in  the  vicinity  of 
Douglas  Park.  An  ordinance  for  an  elevated  line  on  Lake  Street  had 
been  passed  on  December  18,  1888;  but  the  company  building  it  went 

30  The  Washington  Street  tunnel  was  completed  January  i,  1869,  and  the  LaSalle  Street 
tunnel  was  opened  July  4,  1871  (Moses  and  Kirkland,  op.  cit.,  I,  145). 


148  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

through  many  vicissitudes  and  it  was  not  until  November  6,  1893,  that 
it  was  in  operation  from  Market  and  Madison  streets  to  Lake  and  Cali- 
fornia Avenue.  Meanwhile,  a  comprehensive  scheme  for  West  Side  ele- 
vated transportation  was  formulated  in  the  Metropolitan  Elevated 
Company,  but  this  project  did  not  become  an  actuality  until  1895. 

a)  The  cable  loops. — By  1890  three  separate  cable  systems,  from  the 
South,  North,  and  West  sides,  respectively,  after  collecting  the  pas- 
sengers from  their  tributary  horse-car  lines  and  ancillary  cable  systems, 
carried  them  through  three  separate  gateways  to  the  main  business 
section  and  deposited  them  along  a  brief  loop  which  each  cable  line 
transcribed  in  the  central  area.31  Long  before  the  elevated  loop  became 
an  accomplished  fact,  downtown  business  men  were  taught  the  value  of 
a  traffic  loop  which  deposited  the  passengers  gathered  from  a  wide 
residential  area  into  a  limited  business  area.  The  oldest  loop,  formed 
by  the  South  Side  cables  in  1882,  inclosed  the  section  between  State 
Street,  Wabash  Avenue,  Lake  Street,  and  Madison  Street.  It  contrib- 
uted greatly  to  the  rise  of  business  frontage  values  at  State  and  Madison 
streets.  The  loop  made  by  the  North  Side  cables  in  1888  was  formed  by 
the  North  Side  cable  lines  turning  from  Clark  to  LaSalle  Street  at 
Illinois  Street,  thence  running  south  on  LaSalle  Street  to  Monroe 
Street,  east  on  Monroe  Street  to  Dearborn  Street,  north  on  Dearborn 
Street  to  Randolph  Street  and  west  on  Randolph  Street  to  LaSalle 
Street.   This  loop  was  one  of  the  chief  causes  for  the  sudden  rise  of 
Dearborn  Street  from  a  place  of  obscurity  to  one  of  the  most  prominent 
office  streets  of  Chicago  in  1889,  as  it  was  also  the  cause  of  the  decline 
in  the  value  of  North  Clark  Street  south  of  Illinois  Street  where  the 
cable  line  turned  from  Clark  Street.  The  West  Side  cables,  entering  the 
central  business  district  through  the  Washington  Street  tunnel,  formed 
a  loop  around  the  section  from  Randolph  to  Madison  streets  and  Wells 
to  LaSalle  streets.  The  cable  lines  on  Randolph  Street  and  LaSalle 
Street  that  were  built  from  1888  to  1890  were  undoubtedly  a  factor  in 
prompting  the  location  of  a  number  of  new  skyscrapers  on  these 
streets,  reversing  the  southward  flow  of  business  that  had  begun  with 
the  migration  of  the  Board  of  Trade. 

b)  Projected  elevated  and  surface  lines. — Not  merely  the  lines  that  were 
actually  constructed,  but  visionary  lines  that  were  projected  by  pro- 
moters but  never  built  had  a  great  influence  on  the  speculative  real 

31  See  Fig.  24  for  a  map  of  transportation  lines  in  1891. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR     149 

estate  market  of  1889  and  1890.  In  the  welter  of  projects  that  were 
discussed  or  that  were  started  but  could  not  overcome  all  the  obstacles 
to  obtaining  the  consent  of  property  owners,  securing  an  ordinance 
from  the  city  council,  and  raising  the  necessary  capital,  it  was  difficult 
for  the  average  lot-buyer  to  decide  which  transportation  lines  would 
succeed  and  which  would  fail.  Even  in  the  case  of  lines  already  partly 
constructed,  it  was  often  not  known  where  the  termini  would  finally  be 
located.  Nearly  every  subdivision  was  sold  under  the  assurance  that  an 
elevated  line  or  electric  street-car  line  would  run  directly  past  the  buy- 
er's lot,  or  as  close  as  it  would  be  desirable  to  have  it  run.  Had  all  the 
projected  lines  been  actually  constructed,  the  city  and  its  suburbs 
would  have  been  gridironed  with  elevated  and  electric  lines.  As  these 
transportation  schemes  by  their  number  and  variety  confused  land- 
buyers,  and  as  some  of  these  illusions  had  more  effect  on  the  market  of 
1889  and  1890  than  the  actual  construction  of  lines  did  on  the  market 
of  1896,  it  may  be  well  to  mention  some  of  them.  There  were  abortive 
elevated  lines  like  the  Chicago,  Cook  County  Passenger  and  Dummy 
Railroad,  which  secured  the  consent  of  the  majority  of  the  owners  for 
an  elevated  line  along  Milwaukee  Avenue;  the  Milwaukee  Alley  Ele- 
vated Company;  and  North  Side  elevated  lines  that  were  to  run  from 
the  downtown  business  district  to  Evanston,  such  as  the  Chicago  and 
Evanston  Elevated  Railrod  and  Transit  Company,  the  Cass  Street, 
Lake  View  and  Evanston  Railroad  Company,  the  Chicago  Transit,  and 
the  Citizen's  Rapid  Transit  Company.  There  were  South  Side  schemes 
like  the  Calumet  Transportation  Company  (from  Blue  Island  to 
Chicago),  the  proposed  elevation  of  the  Rock  Island  Railroad,  the 
Forsythe  Elevated  Railroad  Company  (to  run  from  the  Indiana  state 
line  to  Chicago),  a  State  Street  elevated  line,  and  an  elevated  line  that 
was  to  run  on  Sixty-third  Street  and  southwest  through  Englewood. 
Again  there  was  the  Chicago  North  and  South  Elevated  Railroad  Com- 
pany that  was  to  run  north  and  south  from  city  limits  to  city  limits  on 
Halsted  Street.  All  these  plans,  vividly  set  forth  by  their  promoters 
and  acted  upon  as  almost  certain  of  realization  in  1890,  had  died  a 
natural  death  by  i89i.32 

3.  Steel-frame  skyscrapers,  1885-94. — Before  1880  there  were  few 
buildings  in  Chicago  exceeding  six  stories  in  height,  and  none  higher 
than  eight  stories.  Crude  elevators,  worked  by  hand  power,  imposed 

32  Chicago  Tribune,  April  12,  1892. 


150  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

the  first  limitation  on  vertical  expansion.  As  elevators  were  improved 
by  the  use  of  water,  steam,  and  electric  power,  it  was  found  that  the 
increased  weight  of  the  stone  and  masonry  on  the  ground  floor  that  was 
necessary  to  support  additional  stories  curtailed  the  valuable  first-floor 
space.  Furthermore,  not  only  did  the  expense  of  the  foundations  in- 
crease at  a  disproportionate  rate  for  each  additional  story  added,  but  an 
absolute  limit  to  height  was  soon  reached  when  the  base,  no  matter 
how  massive,  would  support  no  more  weight.  Even  with  these 
handicaps,  there  was  the  expanding  demand  for  floor  space  in  a  limited 
area  which  exerted  a  strong  pressure  from  1881  to  1885  to  raise  the 
height  of  buildings  in  the  new  Board  of  Trade  quarters.  The  height 
limit  on  five  buildings  was  pushed  up  to  nine  stories  and,  finally,  by 
1884  and  1885,  to  eleven  and  twelve  stories.  One  of  these  buildings,  the 
Home  Insurance  Building,  started  in  1884  at  the  corner  of  LaSalle  and 
Adams  streets,  had  a  steel  frame.  While  not  generally  recognized  at 
the  time,  its  architects  had  hit  upon  a  principle  that  was  to  revolution- 
ize office-building  construction.  The  weight  of  the  upper  floors  was  no 
longer  to  rest  upon  the  first  floor,  but  a  steel  frame  like  a  basket  sup- 
ported each  floor  at  its  own  level,  so  that  the  masonry  on  the  top  of  the 
steel  frame  could  be  built  first  if  desired.  The  chief  limitation  to  the 
height  to  which  buildings  could  not  be  pushed  upward  was  imposed  by 
the  increasing  space  needed  for  elevators. 

The  Home  Insurance  Building  was  somewhat  of  a  compromise  be- 
tween the  old  and  the  new  types  of  construction,  so  that  the  full  pos- 
sibilities of  the  new  method  were  not  at  first  recognized  or  appreciated. 
In  fact,  the  upper  floors  of  these  nine-story  buildings  were  at  first 
avoided  by  tenants,  and  there  was  a  period  of  hesitation  in  which  new 
buildings  were  planned  with  foundation  strong  enough  to  support  nine 
stories,  but  which  were  first  to  be  carried  only  to  a  height  of  only  seven 
stories.  With  the  completion  of  so  many  new  office  buildings  in  the 
Board  of  Trade  quarters,  some  of  which  were  only  partially  filled,  there 
seemed,  moreover,  no  pressing  need  for  more  and  higher  buildings. 

The  tide  turned  in  favor  of  the  skyscraper  in  1888  and  1889  when 
the  Tacoma  Building  at  the  northeast  corner  of  Madison  and  LaSalle 
Street,  a  thirteen-story  building  of  out-and-out  steel-skeleton  type,  was 
started  and  finished.  The  popularity  of  the  upper  floors  on  account  of 
the  abundance  of  air  and  light  had  been  conclusively  demonstrated. 
The  success  of  the  first  tall  buildings,  made  possible  by  their  scarcity, 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    151 

by  the  prestige  of  having  an  office  in  them,  and  by  the  fact  that  the 
sites  for  them  had  been  purchased  at  values  based  on  the  income  of  six- 
story  buildings,  started  a  craze  to  put  up  skyscrapers  that  was  not  to  be 
explained  by  economic  considerations  of  net  income  alone.  While  the 
prospectus  of  these  buildings  always  presented  an  attractive  income 
set-up  on  the  assumption  that  all  the  offices  would  be  rented,  which 
would  probably  have  provided  incentive  enough  in  the  gullible  days  of 
1889,  other  non-commercial  motives  played  an  important  part.  There 
had  been  no  general  advance  in  office  rents  and,  in  fact,  a  decline  in  the 
Board  of  Trade  quarters.  It  was  estimated  in  1885  that  seven-hundred 
new  offices  were  required  annually,  but  in  the  period  from  1885  to 
1888,  thirty- three  hundred  new  offices  had  been  built,  of  which  five 
hundred  were  vacant.33 

In  spite  of  this  apparent  lack  of  need  for  more  office  space,  great 
structures  were  erected.  The  Auditorium,  finished  in  1889,  had  been 
built  as  a  civic  enterprise  by  a  stock  subscription  of  wealthy  men 
to  provide  a  hall  for  national  political  conventions.  The  eighteen-story 
Masonic  Temple  was  financed  by  the  sale  of  stock  to  Masons  on  the 
plea  that  it  would  not  only  be  profitable  but  would  provide  lodge  halls 
and  be  a  monument  to  their  order.  The  Medinah  Temple  was  a  similar 
lodge  enterprise.  A  projected  thirty-four-story  Odd  Fellows  Temple, 
however,  proved  to  be  a  castle  in  the  air.  The  example  of  the  Audi- 
torium was  followed  in  the  case  of  many  other  buildings.  In  this  period 
a  total  of  twenty-one  buildings  was  constructed  out  of  the  proceeds  of 
the  sale  of  stocks  and  bonds — $15,500,000  in  stocks,  and  $6,000,000  in 
bonds — to  wealthy  men.  As  ninety-nine-year  leases  had  become  popu- 
lar and  it  was  possible  to  make  loans  upon  them,  some  of  these  build- 
ings were  constructed  by  promoters  with  very  little  cash  capital. 

The  financial  success  of  these  new  skyscrapers  was,  until  the  end  of 
the  World's  Fair  in  1893,  greater  than  might  have  been  anticipated. 
Tenants  poured  out  of  the  old  buildings,  now  rapidly  becoming  obso- 
lete, into  the  new  and  more  modern  quarters  that  had  better  elevator 
service,  more  ornate  fixtures,  and  more  light  and  air.34  This  exodus  was 
facilitated  in  many  cases  by  the  assumption  of  old  leases  by  the  agents 

33  Ibid.,  March  25,  1888. 

34  For  an  impression  by  a  contemporary  writer  of  the  prestige  attached  to  an  office  in  a 
skyscraper  see  Henry  Blake  Fuller's  novel,  The  Cliff -Dwellers  (New  York:  Harper  &  Bros., 
1893)- 


152  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

of  the  new  buildings.  A  large  demand  for  office  space  sprang  up  from 
the  new  manufacturing  concerns  that  were  locating  in  or  near  Chicago 
at  this  time.  Other  tenants  were  secured  from  the  increasing  numbers 
of  people  who  were  entering  the  real  estate  business,  and  from  pro- 
moters of  enterprises  for  the  World's  Fair,  who  sought  to  enhance  their 
prestige  by  having  an  office  in  these  popular  skyscrapers.  Doctors  and 
dentists  found  that  it  paid  to  have  an  office  in  high  buildings  near  the 
State  Street  stores.  Department  stores  discovered  that  people  pre- 
ferred to  ascend  in  elevators  rather  than  walk  a  block  to  a  side  street. 
Thus  vertical  rather  than  lateral  expansion  became  the  order  of  the  day, 
and  some  of  these  structures  paid  handsome  returns,  for  a  time,  even  on 
their  common  stock. 

The  high  buildings  were  well  distributed  over  the  downtown  area. 
There  was  a  group  at  the  south  end  of  the  business  district  mainly  on 
Dearborn  Street,  such  as  the  sixteen-story  Monadnock  Building  (1891), 
sixteen-story  Manhattan  Building  (1893),  the  Old  Colony  Building 
(1893),  the  Ellsworth  Building  (1893),  the  Marquette  Building  (1894), 
the  Great  Northern  Hotel  (1893),  and  the  Hartford  Building  (1894). 
There  was  another  group  along  LaSalle  Street  such  as  the  Stock  Ex- 
change Building,  the  Y.M.C.A.  Building,  and  the  New  York  Life 
Building.  Still  another  group  was  located  at  the  north  end  of  the  cen- 
tral business  district  on  Randolph  and  Washington  streets,  such  as  the 
eighteen-story  Masonic  Temple  (1891),  the  Ashland  Block  (1891),  the 
German  Theater  Building  (1891),  the  Cook  County  Abstract  (now  Chi- 
cago Title  and  Trust)  Building  (1891),  and  the  Unity  Building  (now 
American  Bond  and  Mortgage  Building)  (1891)  on  Dearborn  Street  near 
Randolph.  The  Columbus  Memorial  Building,  the  Reliance  Building, 
and  the  Champlain  Building  were  erected  on  State  Street  from  Wash- 
ington to  Madison  streets.  These  buildings  were  regarded  as  so  many 
anchors  to  hold  trade  in  their  vicinity,  and  the  large  number  of  tenants 
concentrated  in  these  structures  did  have  a  tendency  to  enhance  the 
value  of  surrounding  business  property. 

The  advent  of  the  skyscraper  was  responsible  for  a  marked  increase 
in  ground  values  in  the  central  business  district  of  Chicago  from  1889  to 
1891.  Although  the  twenty-five  or  thirty  buildings  from  twelve  to  six- 
teen stories  in  height  erected  from  1889  to  1894  if  bunched  together 
would  not  have  occupied  more  than  three  solid  blocks,  or  7  per  cent  of 
the  main  business  district,  all  land  in  that  area  was  revalued  on  the  basis 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR     153 

of  what  it  would  produce  if  occupied  by  a  sixteen-story  building. 
"Tear  down  that  old  rat  trap  and  erect  a  sixteen-story  building"  became 
the  slogan  of  1889,  and  if  the  owner  of  the  land  did  not  actually  erect 
one  himself,  he  constructed  a  hypothetical  sixteen-story  building  on  his 
land  to  determine  what  his  land  would  be  worth  to  someone  who  did 
want  to  put  up  such  a  building.  Had  all  these  lots  in  the  downtown 
area  been  covered  with  skyscrapers,  there  would,  of  course,  have  been 
a  vast  oversupply  of  offices  which  would  have  caused  a  reduction  in 
rents  to  a  point  that  would  have  nullified  these  calculations.  The  re- 
sult of  revaluing  the  ground  on  the  basis  of  what  it  would  yield  if  im- 
proved to  the  best  advantage  was  that  the  income  on  old  buildings 
dropped  to  2  per  cent  on  the  higher  land  value.  Stories  were  added  to 
buildings  whose  foundations  were  strong  enough  to  stand  it,  and  other 
old  structures  were  remodeled  and  modernized  to  enable  them  to  hold 
their  tenants  in  the  face  of  the  new  competition.  Skyscrapers  thus  in- 
creased the  potential  floor  space  that  could  be  obtained  from  the  same 
ground  area.  It  was,  however,  the  more  intensive  use  of  the  ground 
floor  areas  due  to  the  increased  number  of  shoppers  rather  than  the 
taller  buildings  that  was  responsible  for  higher  land  values  in  the  retail 
shopping  centers  on  State  Street. 

Opposition  to  the  skyscraper  had  begun  to  develop  even  in  1889. 
It  came  first  from  the  owners  of  property  on  the  edge  of  the  main  busi- 
ness district  and  on  secondary  business  streets  who  wanted  business  to 
expand  laterally  rather  than  vertically.  Second,  it  came  from  the  own- 
ers of  some  skyscrapers  already  erected  who  wanted  to  enjoy  a  monop- 
oly advantage.  Third,  it  came  from  owners  of  old  buildings  who  ob- 
jected to  the  assessment  of  their  land  for  taxation  on  the  basis  of  its  use 
for  a  tall  building.  These  various  interests  were  successful  in  securing 
the  passage  of  an  ordinance  in  1893,  limiting  the  height  of  buildings  to 
130  feet,  or  virtually  ten  stories.  A  few  taller  buildings  were  put  up 
afterward  under  special  permits  secured  before  the  passage  of  the  ordi- 
nance. As  there  was  an  oversupply  of  high  office  buildings  by  1894, 
this  ordinance  did  not  have  a  pronounced  restrictive  tendency  of  itself, 
as  other  forces  were  coinciding  with  it  to  check  further  skyscraper 
construction. 

4.  Annexation. — On  June  29,  1889,  by  an  affirmative  popular  vote 
of  both  the  city  and  the  townships  affected,  a  territory  of  120  square 
miles  was  annexed  to  Chicago.  By  the  addition  of  the  townships  of 


MAP  OF  CHICAGO 


OF  CITY  LIMITS 
BY  ANNEXATIONS 


LEGEND 

ORIGINAL  TOWN 
CITY  LIMITS.  1870  TO  1886 
HIJ  ANNEXATIONS.  1887  TO  1895 

71  """"  Ijljj  ANNEXATIONS.  1699  TO  1928 


PRtPARED  BY  HOMCK  HCYT 


FIG.  25 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    iSS 

Hyde  Park,  Lake,  Lake  View,  Jefferson,  and  part  of  Cicero,  the  area 
within  the  city  limits  was  increased  from  36  to  169  square  miles.35 
With  the  addition  of  over  two  hundred  thousand  people  in  the  new  ter- 
ritory, Chicago  had  over  a  million  population  and  became  the  second 
largest  city  in  the  United  States. 

The  actual  effect  of  annexation  could  easily  be  overestimated.  The 
annexed  territory  had  long  been  closely  associated  with  Chicago.  The 
formal  extension  of  the  city  limits  did,  it  is  true,  exert  an  important 
influence  in  enabling  the  outlying  territory  to  secure  city  water  service, 
sewers,  pavements,  and  police  and  fire  protection,  which  were  most  im- 
portant factors  in  securing  a  favorable  vote.36  The  psychological  ef- 
fect of  the  announcement  that  Chicago  was  a  city  of  over  a  million 
people,  however,  coming  at  a  time  when  other  cities  were  using  every 
possible  method  to  swell  their  population  figures  by  adding  suburban 
areas  and  even  padding  the  census  figures,  drew  the  particular  atten- 
tion of  the  nation  to  the  remarkable  growth  of  Chicago  in  sixty  years 
and  aided  it  in  securing  the  World's  Fair.  From  a  subdivider's  stand- 
point, a  great  expanse  of  prairie  had  been  brought  inside  the  city  limits, 
to  which  city  water,  sewers,  and  pavements  might  be  extended  or  pro- 
jected and  which  could  be  platted  and  sold  as  Chicago  city  lots. 

5.  The  World's  Fair. —The  fact  that  a  World's  Fair  to  celebrate  the 
four-hundredth  anniversary  of  the  voyage  of  Christopher  Columbus 
would  probably  be  held  somewhere  in  the  United  States  in  1892  led  to 
anticipations  as  early  as  1887  that  Chicago  would  be  selected  as  the 
site.  The  Chicago  members  of  Congress  worked  with  such  astuteness 
to  effect  political  combinations  to  bring  this  about  that  by  1889 
Chicago  was  considered  the  probable  choice  of  Congress.  Although 
New  York  was  a  serious  contender  for  the  honor,  with  St.  Louis  and 
Washington  as  other  candidates,  Chicago  received  the  majority  vote 
of  Congress  on  February  25,  1890.  This  favorable  action  had  already 
been  largely  anticipated  by  local  real  estate  men,  but  non-resident 
owners  of  Chicago  property  were  so  surprised  that  they  advanced  the 

35  For  details  as  to  area  annexed  at  this  time,  and  as  to  other  smaller  areas  annexed 
shortly  afterward,  see  Fig.  25. 

36  This  was  particularly  important  in  the  township  of  Jefferson  according  to  a  statement 
made  to  the  writer  in  September,  1933,  by  William  H.  Spikings,  an  old  resident.  These  ad- 
vantages were  not  so  great  in  the  case  of  that  part  of  Hyde  Park  near  Fifty-third  Street  and 
Lake  Park  Avenue  which  had  its  own  waterworks.  Here  there  was  strong  opposition  to  an- 
nexation, according  to  John  E.  Cornell,  a  son  of  Paul  Cornell,  the  founder  of  Hyde  Park. 


156  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

prices  of  their  holdings  25  per  cent  or  withdrew  them  from  the  market 
altogether. 

After  Chicago  had  been  selected  as  a  site,  there  was  a  baffling  delay 
of  over  six  months  before  it  was  decided  in  what  part  or  parts  of  the 
city  the  Fair  would  be  held.  At  first  there  were  proposals  for  dividing 
the  Fair  into  two  sections,  giving  part  to  the  South  Side  and  part  to 
the  West  or  North  sides.  A  united  Fair  was  next  decided  upon,  and 
the  first  location  picked  for  it  was  on  the  lake  front  near  the  downtown 
area  on  two  hundred  acres  of  ground  to  be  made  on  the  lake  front  for 
that  purpose.  In  spite  of  a  majority  decision  in  favor  of  the  lake-front 
site,  a  minority,  led  by  Lyman  J.  Gage,  influenced  partly  by  the  fear 
that  the  manufacture  of  so  much  new  land  would  lower  the  value  of 
central  business  property,  induced  the  World's  Fair  Commission  to 
select  Jackson  Park  as  the  main  site  of  the  Fair.37  The  lake  front,  how- 
ever, was  to  be  retained  as  the  gateway  to  the  Fair.  West  Side  politi- 
cians then  attempted  some  machinations  with  the  state  legislature 
that  would  put  Jackson  Park  out  of  the  running.  The  South  Park 
Commissioners  had  sought  permission  to  issue  bonds  to  drain  Jackson 
Park,  the  cost  of  which  was  to  be  borne  by  the  people  as  part  of  the 
permanent  expense  of  improving  the  park,  for  it  was  believed  that 
those  promoting  the  Fair  would  not  incur  this  cost  when  other  sites 
already  improved  were  available.  Those  favoring  the  West  Side  parks 
as  a  site  for  the  Fair  sought  to  prevent  a  law  authorizing  this  South 
Park  bond  issue  from  being  passed.  This  indirect  attack  failed,  how- 
ever, and  the  West  and  North  sides  were  eliminated  as  possibilities. 
The  exact  location  of  the  Fair  was  not  yet  settled.  The  idea  of  extending 
the  Fair  along  the  lake  front  north  of  Jackson  Park  was  abandoned 
and  the  consent  to  use  the  Midway  in  addition  to  Jackson  Park  was 
obtained  from  the  South  Park  Commissioners.  The  request  made  in 
September,  1890,  for  the  use  of  Washington  Park  also  started  a  wild 
boom  in  lots  along  Cottage  Grove  Avenue  from  Forty-ninth  to  Sixtieth 
streets,  but  this  movement  collapsed  when  the  South  Park  Commis- 
sioners refused  permission.  After  many  months  of  vacillation,  the 
selection  of  Jackson  Park  and  the  Midway  as  the  only  site  of  the  Fair 
was  finally  made. 

The  expectation  that  Jackson  Park  would  be  the  final  choice  as  the 
site  of  the  Fair  had  already  caused  land  values  near  by  to  rise  to  what 

&  Chicago  Tribune,  September  13,  1890. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    157 

the  real  estate  editor  of  the  Chicago  Tribune  called  "crack-brained 
altitudes."  The  chances  of  the  West  and  North  sides  had  always 
seemed  so  remote  that  they  never  had  an  appreciable  land  boom  on  the 
possibility  of  securing  the  Fair.  The  imagination  of  the  times  alter- 
nated from  speculation  about  the  site  of  the  Fair  to  the  actual  content 
of  the  Fair  itself.  Some  of  the  bizarre  and  grandiose  conceptions  of 
projected  World's  Fair  towers  may  give  the  readers  an  idea  of  the  ex- 
travagant fancies  of  a  boom  era.38 

The  effect  of  the  World's  Fair  on  land  values  in  the  vicinity  of  Jack- 
son Park  and  the  Midway  had  been  almost  fully  discounted  before  the 
end  of  1890,  nearly  three  years  before  the  Fair  opened  its  gates.  In  the 
meantime,  during  1891  and  1892  landowners  in  that  vicinity  sought  to 
realize  something  on  their  investment  in  land  which  they  were  unable 
to  sell  at  a  profit  by  building  World's  Fair  hotels  and  apartments. 
Many  of  these  were  built  along  Fifty-fifth  Street  and  near  Jackson 
Park.  The  extravagant  hopes  that  were  entertained  as  to  the  possible 
income  to  be  derived  from  World's  Fair  guests  were  doomed  to  grievous 
disappointment.  The  crowds  were  slow  in  coming,  the  full  peak  of  at- 
tendance lasted  only  a  short  time,  and  soon  after  the  close  of  the  Fair 
most  of  these  projects  were  in  the  hands  of  receivers.  The  low  rents  at 
which  the  vacant  apartments  were  offered  in  the  winter  of  1893-94 
attracted  tenants  from  all  parts  of  the  city  to  this  section. 

The  Fair  proved  to  be  a  great  disappointment  to  the  hopes  of  real 
estate  owners.  While  its  construction  was  going  on,  many  potential 
buyers  waited  for  the  reaction  in  land  values  which  was  expected  to  take 
place  after  it  closed.  While  it  was  open  and  attracting  the  greatest 

*8  The  following  were  some  of  the  proposed  projects  submitted  by  various  people  in  1890: 
"Buildings  50  stories  high,  amphitheatres  to  hold  100,000  people,  a  building  1000  feet  high 
in  the  form  of  an  eagle,  a  rotating  coliseum,  a  building  six  stories  high  resting  on  metal  re- 
plicas of  the  animals  mentioned  in  Revelations,  a  building  with  42  towers  representing  each 
of  the  states,  a  collection  of  vast  halls  under  a  single  roof,  a  combined  park  and  opera  house, 
a  Tower  of  Babel  40  stories  high  with  a  different  language  spoken  on  each  floor,  a  tower  on 
rollers,  a  tower  half  a  mile  high  surmounted  by  a  globe  and  the  statue  of  Columbus,  five 
floating  islands  turning  on  a  central  pivot,  an  aerial  island  supported  by  six  balloons,  the 
construction  of  all  buildings  on  floats  with  viaducts  between  them,  a  colossal  globe  with 
two  theaters  on  the  interior,  a  ground  map  of  the  United  States  covering  750  acres,  the 
hanging  gardens  of  Babylon  reproduced,  a  mountain  1000  feet  high  with  a  glass  palace  on 
the  summit,  a  replica  of  Dante's  Hell,  a  telescope  on  a  tower  powerful  enough  to  discover 
animals  on  the  planets,  a  monument  to  Lincoln  1000  feet  high,  a  replica  of  Niagara  Falls 
worked  by  steam  power,  a  pyramid  1200  feet  square  at  the  base  and  1200  feet  high  and  a 
reproduction  of  the  seven  wonders  of  the  ancient  world"  (editorial,  ibid.,  June  15,  1890). 


158  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

crowds,  it  engendered  a  holiday  spirit  that  was  not  conducive  to  the 
purchase  of  real  estate.  When  it  was  closed,  amid  a  financial  depres- 
sion, leaving  empty  flats  and  apartments  in  its  vicinity,  a  deeper  gloom 
set  in  than  had  been  anticipated.  The  World's  Fair,  however,  was  un- 
justly made  the  scapegoat  by  the  generation  that  succeeded  for  all  the 
ills  that  followed  the  falling-off  in  real  estate  activity  after  1890  and 
the  panic  of  1893.  Its  specific  influence  was  confined  to  a  few  square 
miles  near  Jackson  Park,  and  it  was  but  one  of  a  number  of  factors 
contributing  to  the  boom  of  1890.  Had  it  occurred  at  another  time,  the 
effect  it  exerted  on  land  values  might  have  been  altogether  different. 

6.  Department  stores  and  apartments. — Large  stores  with  many  de- 
partments under  one  roof  were  an  innovation  of  this  period  that  made 
heavy  inroads  on  the  business  of  the  small  store.  These  stores  adver- 
tised extensively  in  the  newspapers  and  offered  "bargains"  to  the 
housewife  as  well  as  a  variety  of  goods  that  the  small  stores  could  not 
match.  The  improved  transit  facilities  to  the  downtown  area  facilitated 
the  rise  of  these  large  emporiums,  and  their  popularity  in  turn  was  a 
contributing  cause  of  the  rise  of  land  values  in  the  central  business  dis- 
trict, as  it  was  likewise  a  factor  in  depressing  the  values  of  certain 
streets  such  as  West  Madison  Street,  Milwaukee  Avenue,  and  Cottage 
Grove  Avenue. 

The  increasing  demand  for  apartments  as  a  result  of  the  improved 
types  of  apartment  construction  and  room  layout  was  tending  to  raise 
the  value  of  land  suitable  for  apartment  sites  and  to  lessen  the  tendency 
to  spread  out  into  the  suburbs. 

The  aggregate  effect  of  the  factors  just  described  was  to  concentrate 
business  in  the  downtown  area,  to  depopulate  the  intermediate  belt  of 
old  wooden  houses,  and  to  build  up  virgin  land  on  the  edge  of  settle- 
ment. Such  was  the  specific  effect  of  the  swifter  transportation  afforded 
by  cable,  steam,  elevated,  and  electric  lines  that  enable  people  to  hurry 
past  the  decaying  areas  built  up  by  the  transit  lines  of  the  former  gen- 
eration. It  was  the  effect  of  the  skyscrapers  and  department  stores  in 
concentrating  business  in  a  small  downtown  area,  and  it  was  the  ef- 
fect of  manufacturers  and  belt-line  railroads,  of  annexation,  of  the 
World's  Fair,  and  of  new  suburban  transit  lines  to  spread  out  the  resi- 
dential area  over  new  tracts  that  were  not  stigmatized  by  obsolete 
buildings  or  an  immigrant  population.  Many  half -built-up  tracts  close 
to  the  heart  of  the  city  were  skipped  over  in  this  exodus  to  new  unde- 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    159 

veloped  tracts.  In  1889  an  observer  estimated  that  the  population 
within  the  old  city  limits  could  be  doubled  if  it  were  compactly  settled. 
The  factors  just  considered  have  had  a  most  potent  effect  in  deter- 
mining the  extent  of  the  variation  between  land- value  peaks  and  val- 
leys and  in  fixing  the  location  of  the  high  points  on  the  land- value 
maps.  It  would  be  a  mistake,  however,  to  suppose  that  such  forces 
would  have  produced  the  same  effect  operating  in  a  vacuum  or  apart 
from  the  general  market  conditions  that  prevailed  from  1887  to  1894 
in  Chicago.  The  tone  of  the  land- value  market  itself  and  the  psychol- 
ogy it  generated  determined  to  a  considerable  extent  what  weight  and 
bearing  these  factors  would  immediately  have  on  land  values.  It  is 
therefore  necessary  now  to  describe  this  market  as  a  complex  entity. 

E.   THE  MOVEMENT  OF  LAND  VALUES  IN  THE  CHICAGO  REAL 
ESTATE  MARKET,  1886-94 

The  beginning  of  a  new  boom,  1886-88. — The  new  equilibrium  of 
Chicago  land  values  in  which  the  land  within  the  city  limits  had  re- 
gained by  1883  the  peak  level  of  ten  years  before  was  maintained  with 
little  change,  despite  the  decline  in  general  business  activity,  during 
1884  and  1885.  In  1886  there  was  a  marked  gain  in  the  volume  of 
manufacturing  and  of  real  estate  transfers  as  compared  with  the  pre- 
ceding year,  the  total  value  of  real  estate  sales  increasing  from  fifty- 
seven  to  eighty-seven  million  dollars.39  Subdivision  activity  was  still 
restricted.  The  4,135  new  lots  platted  in  Cook  County  in  1886  showed 
an  increase  over  the  3,210  laid  out  in  1885,  but  both  these  amounts  were 
relatively  low  compared  with  the  peak  figures  of  1873.  Land  values  in 
Hyde  Park  and  Englewood  were  advancing.40  The  construction  of  the 
Wisconsin  Central  Railroad  through  the  territory  west  of  Douglas 
Park  was  arousing  hopes  on  the  part  of  those  owners  who  were  nearly 
worn  out  by  the  payment  of  interest  and  taxes  since  the  boom  of  1873 
that  they  might  soon  get  their  money  back.41  Property  in  the  down- 
town section  was  firm  and  values  were  slowly  advancing,  although 
property  subject  to  long-term  leases  could  still  be  bought  at  prices  that 
would  net  7  or  8  per  cent  to  the  owner.42 

In  1887  a  number  of  new  factors  appeared  to  enliven  the  real  estate 

39  Real  Estate  and  Building  Journal,  January  2,  1892. 

4°  Chicago  Tribune,  August  8,  1886. 

4'  Ibid.,  September  5,  1886.  *  Ibid.,  October  31,  1886. 


160  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

market.  The  Santa  Fe  Railroad  bought  land  for  its  yards  and  right  of 
way  into  Chicago.43  The  Stickney  tract  was  purchased.  The  South 
Side  cable  lines  were  extended  from  Thirty-ninth  to  Sixty-third  and 
Sixty-seventh  streets.  The  first  rumors  of  the  coming  World's  Fair 
were  being  discussed.44  The  Calumet  Canal  and  Improvement  Com- 
pany bought  the  Forsythe  tract  of  8,000  acres  at  East  Chicago, 
Indiana,  for  a  manufacturing  center.  People  were  vacating  houses  in 
the  city  to  go  to  the  suburbs.  New  belt-line  companies  were  being  or- 
ganized. There  was  talk  of  new  cable  lines  and  of  elevated  railroads.45 
The  yield  on  the  best  improved  properties  had  fallen  to  6  per  cent  as 
compared  with  the  8  or  9  per  cent  yield  of  a  few  years  before.46  The 
number  of  new  lots  subdivided  increased  from  4,135  in  1886  to  13,714  in 
1887.  In  the  fall,  as  the  land  booms  in  Kansas  City,  Omaha,  and 
Minneapolis  began  to  wane,  veteran  operators  from  those  cities  began 
to  come  to  Chicago  and  to  marvel  at  the  cheapness  of  its  acre  tracts.47 
Chicago  investors  still  remembered  the  losses  they  had  sustained  in 
acre  property  bought  in  the  boom  of  1873,  but  the  newcomers  had  more 
confidence  and  bought  acres  on  the  Southwest  Side  that  the  natives 
would  not  touch. 

The  succession  of  favorable  factors  continued  in  1888.  The  cable  on 
North  Clark  Street  was  completed  from  Lincoln  Park  to  the  main 
business  section.48  The  South  Side  Elevated  Company  obtained  the 
consent  of  a  majority  of  the  property  owners  along  its  proposed  route 
and  secured  an  ordinance  from  the  city  council  permitting  it  to  con- 
struct its  line.  The  suburbs  were  building  up  rapidly.  Extensive 
growth  was  taking  place  over  a  wide  area  within  the  city.  New  stores 
and  flats  were  going  up  along  Cottage  Grove  Avenue  as  far  south  as 
Fifty-fifth  Street.49  The  population  of  Englewood  had  increased  to 
20,000.  The  territory  northwest  of  Milwaukee  and  Armitage  avenues 
was  being  settled.50  The  Polish  quarter  at  Chicago,  bounded  by  Ash- 
land, Clybourn,  and  Carpenter  streets,  had  gained  a  population  of 
30,000,  principally  since  i886.SI  In  aristocratic  Edgewater  there  were 

®Ibid.,  May  22,  1887. 

"Ibid.,  August  21,  1887.  &Ibid.,  April  29,  1887. 

Klbid.,  May  22,  1887.  <7  Ibid.,  January  15,  1888. 

4g  Statement  of  J.  V.  Sullivan,  assistant  to  the  president  of  the  Chicago  Surface  Lines, 
to  the  writer  in  1932. 

49  Chicago  Tribune,  August  4,  1888. 

5°  Ibid.,  September  16,  1888.  si  ibid.,  November  4,  1888. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    161 

200  people  where  there  had  been  none  in  i886.53  In  the  vicinity  of 
Douglas  and  Garfield  parks,  in  the  neighborhood  of  Halsted  Street 
between  Fifty-fifth  and  Sixty-ninth  streets,53  in  the  territory  along 
Fifty-fifth  Street  east  of  Cottage  Grove,  in  the  area  along  Sixty-third 
Street  near  the  Illinois  Central  tracts  and  near  the  Rock  Island  tracts 
in  Englewood,  many  buildings  were  being  erected  in  1888.  The  belt  of 
growth  was  on  the  outer  edge  of  the  old  city.  The  belt  of  wooden 
houses  built  after  the  fire  of  1871  was  now  passed  by  for  the  zone  of  new 
growth.  West  Side  landowners  in  particular  complained  of  the  decay 
of  the  region  from  Grand  Avenue  to  Madison  Street  and  from  Halsted 
to  Ashland  Avenue  and  of  the  increasing  number  of  vacant  houses  close 
to  the  city.  Optimism  on  the  whole  prevailed  at  the  close  of  1888. 
' 'Everyone  is  a  bull  on  real  estate"  expressed  the  tone  of  the  market  in 
November,  i888.54  The  value  of  downtown  property,  notwithstanding 
stationary  rents  and  interest  rates,  had  risen  because  it  was  now  capi- 
talized on  a  5  per  cent  basis,  instead  of  the  7  or  8  per  cent  basis  of  1885 
and  the  10  per  cent  basis  of  1873. ss  The  number  of  new  lots  subdivided 
in  Cook  County  had  increased  from  13,714  in  1887  to  18,813  in  1888 
and  acre  values  were  rising.  In  the  downtown  area  there  was  an  eager 
demand  for  property  situated  north  of  Madison  Street  and  east  of 
Wells  Street,  particularly  on  Dearborn  Street.  Except  for  South  Water 
Street,  which  had  a  monopoly  of  the  commission-merchant  business, 
there  was  less  demand  in  1888  for  business  frontage  north  of  Madison 
Street  than  for  that  south  of  it.  The  heavy  hardware  firms  were  mov- 
ing from  Lake  Street  to  the  West  Side  in  the  section  on  Canal  Street 
from  Randolph  Street  to  Madison  Street.56 

As  credit  conditions  were  favorable,  and  as  the  decline  in  railroad 
stocks  and  bonds  and  the  lull  in  the  booms  in  real  estate  in  other  cities 
had  turned  the  attention  of  speculators  to  Chicago  real  estate,  the  stage 
was  set  late  in  1888  for  a  boom. 

The  boom  under  way,  1889. — The  mood  of  the  market  of  1889  was  one 
that  was  ready  to  respond  quickly  to  new  developments  or  even  to  the 
rumors  of  coming  projects.  Consequently  the  effect  of  the  announce- 
ment of  new  electric  lines,  manufacturing  towns,  skyscrapers,  a  larger 
city  with  over  a  million  population,  and  a  coming  World's  Fair  regarded 

vibid.,  October  28,  1888. 

^  Ibid,,  August  5,  1888.  ss  Economist,  October  19,  1889. 

id.,  November  18,  1888.  s6  Chicago  Tribune,  June  22,  1888. 


162  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

as  probable  stimulated  the  imagination  of  every  class  of  people  in 
Chicago  and  attracted  investors  and  speculators  from  all  over  the 
United  States.  The  earnings  of  local  business  men  had  been  favorable, 
the  number  employed  in  manufacturing  industries  in  Chicago  had  in- 
creased from  132,000  to  151,000  in  a  year,  people  were  bringing  their 
savings  and  speculative  profits  from  other  cities,  and  immigrants  re- 
cently arrived  in  Chicago  had  hoards  they  would  not  trust  to  the  banks. 
Tales  of  profits  in  real  estate  already  made  by  their  neighbors  circu- 
lated among  the  residents  of  local  communities  and  aroused  their  desire 
to  use  these  accumulating  funds  for  the  purchase  of  Chicago  land.  This 
desire  was  artificially  enhanced  by  professional  promoters  and  sub- 
dividers. 

This  demand,  in  the  main,  divided  itself  into  an  inquiry  for  central 
business  property,  on  the  one  hand,  and  for  outlying  acre  tracts  and 
suburban  lots,  on  the  other.  The  large  investor  was  interested  in  both, 
but  wage-earners  and  clerks  were  restricted  by  their  purchasing  power 
to  the  cheap-lot  market,  unless  they  banded  together  to  form  syndi- 
cates. 

The  scenes  of  speculative  excitement  were  first  in  the  territory  along 
Madison  Street  west  of  Crawford  Avenue  where  the  reports  of  the  new 
Cicero  and  Proviso  Electric  Line  project  aroused  sudden  interest  in  a 
territory  that  had  been  dormant  for  sixteen  years.  Then,  in  the  down- 
town area,  Dearborn  Street  which  had  long  been  an  obscure  and 
neglected  thoroughfare  because  it  had  not  been  cut  through  south  of 
Monroe  Street,  received  the  benefit  of  the  North  Side  cable  loop,  and 
under  expert  pool  manipulation  made  sensational  gains  in  value.  The 
climax  came  when  the  2O-by-4O-foot  corner  of  Madison  and  Dearborn, 
called  "the  diamond  on  the  shirt  front"  because  it  was  at  the  point  of 
maximum  value,  sold  for  $150,000,  or  at  the  rate  of  $7,500  a  front  foot, 
the  highest  price  ever  paid  up  to  that  time  in  Chicago.  The  effect  of 
this  sale  was  to  break  the  customary  level  of  values,  and  to  convince 
many  Chicago  owners  of  central  property  that  they  had  hitherto  under- 
valued their  property.  The  increasing  demand  for  space  on  State  Street 
within  two  blocks  of  Madison  Street  was  also  pushing  values  upward 
there.  Meanwhile,  the  rapid  growth  of  the  outer  edges  of  the  city  had 
created  a  strong  demand  for  acres  for  subdivision  purposes,  particularly 
on  the  Southwest  Side,  and  out  of  this  situation  grew  up  a  demand  for 
acres  on  the  part  of  one  group  of  speculators  to  sell  to  another  group  of 
speculators. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    163 

Speculation  in  acre  tracts  and  subdivision  activity. — The  most  charac- 
teristic feature  of  a  real  estate  boom  is  the  speculation  in  acre  tracts  and 
the  sale  of  lots  in  subdivisions  to  small  investors.  A  description  of  this 
phase  of  the  market  indicates  the  widespread  interest  of  all  classes  of 
people  in  Chicago  lots  in  1889,  and  it  also  illustrates  the  unique  quali- 
ties of  land  valuations  based  on  such  sales. 

The  prices  of  acre  tracts  close  enough  to  the  city  to  be  suitable  for 
subdivision  fluctuated  from  farm-land  values  to  the  aggregate  value 
they  would  bring  if  sold  out  in  lots.  Since  the  marketing  of  lots  in  a 
subdivision  required  an  organized  sales  campaign  on  the  part  of  a  pro- 
fessional subdivider,  whose  propaganda  was  chiefly  responsible  for  the 
high  level  of  prices  obtained  for  the  lots,  as  will  presently  be  shown, 
there  was  usually  a  wide  margin  between  the  selling  prices  of  the  land 
in  large  tracts  and  the  aggregate  retail  value  of  the  lots  which  were 
obtained  by  subdividing  it.  Often  the  ratio  was  three  to  one  and  some- 
times it  was  as  high  as  ten  to  one.57  The  possibility  of  a  sale  to  a  sub- 
divider  at  a  price  low  enough  to  pay  him  to  undertake  the  work  of 
dividing  into  lots  and  selling  the  lots  was  supposed  to  set  the  limit  of 
value  of  an  acre  tract.  As  both  the  suitability  of  the  land  for  subdivi- 
sion and  the  retail  prices  of  the  lots  were  determined  by  no  fixed  rules, 
acre  tracts  were  in  fact  subject  to  extreme  fluctuations  in  values  in  a 
short  time.  Sometimes  in  the  excitement  of  speculation  their  values 
were  carried  as  high  as  lots  were  selling  at  retail.  There  being  no  way  of 
calculating  their  value  on  an  income  basis,  and  as  their  possible  future 
use  varied  from  that  of  farm  land  to  that  of  intensive  residential  or  in- 
dustrial use,  there  was  such  a  wide  range  of  possibilities  that  the  Valua- 
tion Committee  of  the  Chicago  Real  Estate  Board  refused  to  appraise 
them  at  all. 

Into  this  speculative  field  of  acre  tracts  there  rushed  in  1889  and  1890 
several  classes  of  buyers:  (i)  the  subdivider  buying  for  the  purpose  of 
cutting  the  tract  into  lots  and  selling  the  lots  at  retail;  (2)  professional 
acre  speculators  purchasing  for  the  purpose  of  selling  at  a  profit  to  other 
acre  speculators,  to  subdividers,  or  to  syndicates  of  amateur  specula- 
tors; (3)  groups  of  professional  men  or  clerks  who  were  buying  tracts 
for  actual  use  as  homesites;  and  (4)  syndicates  of  clerks  who  had  pooled 
their  savings  to  buy  acre  tracts  for  a  resale  as  a  whole  or  in  lots  at  a 
profit. 

57  This  is  the  increase  in  the  price  obtained  by  the  retail  sale  of  a  tract  over  the  price 
prevailing  in  large  units  and  does  not  include  the  cost  of  any  street  improvements. 


164  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

There  were  acre  tracts  available  even  in  1889  that  would  have  proved 
profitable  investments  to  any  of  these  classes  of  buyers.  The  majority 
of  buyers,  however,  ran  in  crowds  to  the  spot  where  the  most  rapid 
rises  were  taking  place  and  where  land  values  where  highest;58  and 
that  meant  in  five  cases  out  of  six  that  they  purchased  on  the  South 
or  Southwest  sides  instead  of  on  the  neglected  Northwest  Side,  where 
land  equally  distant  from  the  city  was  only  one-third  as  high.  They 
were  influenced  by  the  rumors  that  were  circulating  everywhere.  As 
the  real  estate  editor  of  the  Chicago  Tribune  phrased  it: 

The  air  is  filled  with  the  music  of  coming  improvements.  Something  important 
is  about  to  happen  all  around.  Almost  every  quarter  section  that  is  between  six 
and  nine  miles  of  the  court  house  has  its  remarkable  development  just  ahead.  One 
is  to  be  the  site  of  a  big  manufacturing  plant,  another  is  to  have  car  shops,  another 
is  to  have  a  new  railroad,  another  has  all  but  got  the  world's  fair.*? 

What  had  been  regarded  as  farm  land  on  the  Southwest  Side  was  now 
valued  as  the  potential  site  of  factories  or  railroad  yards. 

Land  that  a  year  ago  was  valued  according  to  its  ability  to  produce  crops  of  corn, 
oats  and  potatoes  is  now  considered  with  reference  to  its  location  to  the  Calumet 
terminal,  the  Stickney  tract,  the  proposed  Stock  Yards,  or  any  of  the  other  schemes 
to  be  located  in  this  section.  Some  say  the  values  are  justified  by  the  future  pros- 
pects, while  others  deny  that  the  prices  are  in  any  way  warranted.60 

The  buying  of  these  acre  tracts  in  1889,  even  in  the  opinion  of  current 
observers,  was  frequently  reckless  and  indiscriminate: 

When  men,  tempted  by  the  reports  of  advancing  prices  and  not  knowing  whether 
the  advance  is  genuine  and  substantial  or  merely  the  result  of  manpulation,  rush  to 
a  map  and  pick  out  something  for  their  broker  to  buy,  they  are  gambling  and  are 
introducing  an  unnatural  and  unhealthy  stimulus  into  the  market.  Few  people, 
for  instance,  appear  to  know  just  what  is  to  be  the  outcome  of  the  famous  Stickney 
purchase  southwest  of  the  city,  yet  because  a  few  people  do  appear  to  know  and 
have  paid  high  prices  in  that  quarter  buyers  are  rushing  thither  and  making  bids 
which  would  have  been  grounds  months  ago  for  appointment  of  a  commission  de 
lunatico  inquirendo.61 

A  majority  of  the  purchases  were  made  with  a  down  payment  of  not 
over  one-fourth  of  the  total  price,  the  buyer  expecting  to  sell  before  he 
was  called  on  for  his  second  payment.  The  purchasers  of  acre  tracts 
that  "had  no  other  qualifications  than  that  it  occupied  so  much  space 
on  a  map  of  Northern  Illinois"  and  that  were  far  removed  from  trans- 

&  Chicago  Tribune,  March  17,  i88g.  6o  Ibid.,  August  24,  1890. 

^  Ibid.,  November  17,  1889.  6l  Ibid.,  November  24,  1889. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    165 

portation  facilities,  as  well  as  the  buyers  of  better-located  acres  who 
were  paying  the  greatly  increased  prices,  were  warned  that  the  whole 
process  must  finally  stop. 

It  is  perhaps  more  than  likely,  whatever  the  purchase  price  and  whatever  the 
property,  a  market  could  be  found  in  the  next  two  years  which  would  give  the  pur- 
chaser of  today  [May,  1890]  a  profit.  But  will  that  last  purchaser  be  croaking  to  the 
next  generation  about  the  way  he  was  caught  back  hi  '93  ?62 

Again  it  was  pointed  out  that  it  was  a  dangerous  game  to  pay  far  more 
than  the  intrinsic  value  of  the  property  in  the  expectation  that  some- 
one else  could  be  found  who  would  pay  still  more. 

In  the  ruins  of  all  collapsed  booms  is  to  be  found  the  work  of  men  who  bought 
property  at  prices  they  knew  perfectly  well  were  fictitious,  but  who  were  willing  to 
pay  such  prices  simply  because  they  knew  that  some  still  greater  fool  could  be  de- 
pended upon  to  take  the  property  off  their  hands  and  leave  them  a  profit.63 

Such  booms  in  acre  property  could  collapse  as  quickly  as  they  were 
generated.  In  the  fall  of  1889  there  was  a  lull  in  the  acre  market.  It 
was  declared  that  "acre  values  are  so  full  of  wind  that  if  any  more  is 
pumped  in  the  blue  arch  of  heaven  will  have  to  be  lifted  to  make  room 
for  their  expansion"  and  that  "present  values  will  not  stand  the  test  of 
subdivision."64  The  holders  of  acre  tracts  at  these  inflated  values  anx- 
iously waited  for  the  spring  of  1890  to  see  whether  the  furious  specula- 
tion would  be  revived  on  a  larger  scale  or  whether  that  fatal  dulness 
had  begun  which  would  render  their  property  unmarketable.  To  their 
great  joy,  once  more  the  merry  dance  of  speculation  carried  the  value 
of  their  holdings  to  new  heights. 

If  speculating  in  acre  tracts  was  a  hazardous  game  for  the  profession- 
al operator  who  "had  cut  his  eyeteeth"  in  the  booms  in  Kansas  City  or 
Minneapolis  two  years  before,  it  was  particularly  dangerous  for  ama- 
teurs. Early  in  1889  thousands  of  laborers  and  clerks  pooled  their 
savings  and  formed  syndicates  to  purchase  suburban  acre  tracts. 
"Even  servant  girls,  seamstresses  and  woman  clerks  have  caught  the 
fever,  put  their  savings  into  a  lump  and  become  joint  owners  of  sub- 
urban property.  Kindled  by  stories  of  large  profits,  they  believe  it  is 
impossible  to  pay  too  much."65 

Their  judgment  of  values  was  faulty  and  they  were  extremely  gulli- 
ble. "Amateur  acre  speculators  see  millions  in  swamp  lands  and  cab- 

62  Ibid. ,  May  4,  1890.  64  Ibid.,  November  24,  1890. 

.,  April  13,  1890.  ^Ibid.,  April  21,  1889. 


166  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

bage  fields  a  mile  away  from  a  railroad  track."66  They  were  easily  im- 
posed upon  by  professional  operators,  not  knowing  that  the  asking 
prices  were  far  above  what  the  property  could  be  secured  for  by  shrewd 
bargainers;  and  they  were  easily  led  to  believe  they  could  quickly  resell 
the  property  at  a  large  profit  to  other  speculators  or  that  they  could 
subdivide  the  property  and  easily  obtain  the  same  prices  for  the  lots 
that  the  big  firms  received.  The  real  estate  editor  of  the  Chicago 
Tribune  commented  on  their  inexperience:  "It  takes  the  green  buyer 
of  acres  some  time  to  learn  that  all  is  considered  fair  in  real  estate  as  in 
love  and  war,"67  and  on  the  fact  that  they  paid  too  much  for  their 
property,  "if  syndicates  pay  retail  prices  for  ten  or  twenty  acre  tracts 
none  but  a  professional  boomer  can  figure  out  a  profit  for  them."68 

Having  thus  been  led  to  pay  too  much  for  their  holdings,  even  in 
terms  of  the  inflated  boom  prices,  when  the  amateur  acre  syndicates 
turned  to  the  one-time  optimistic  operators  who  had  sold  them  their 
tracts  and  who  had  assured  them  the  land  could  quickly  be  disposed  of 
at  a  profit,  they  found  that  these  wily  men  had  now  changed  their  tune. 
The  real  estate  operators  who  had  before  expressed  such  willingness  to 
take  the  acres  off  their  hands  at  an  advance  in  price  had  suddenly  be- 
come extremely  pessimistic  about  the  value  of  their  tracts  and  gave 
them  not  the  slightest  encouragement.69  When  the  amateurs  next 
sought  to  convert  their  land  into  lots  and  to  realize  the  same  prices  that 
were  apparently  so  easily  gathered  in  by  the  big  subdividers,  they 
suddenly  found  that  "lots  did  not  sell  themselves";  that  it  required 
great  ingenuity,  as  well  as  the  use  of  brass  bands,  fireworks  displays, 
large  advertisements,  excursion  trains,  and  an  organized  sales  campaign 
"to  work  off"  the  lots  at  retail  prices.  It  was  not  enough  to  attract 
customers  to  offer  their  lots  at  lower  prices  with  more  improvements: 

A  small  dealer,  who  has  a  few  hundred  lots  in  a  steady  going  suburb,  complains 
that  people  pass  him  by  and  make  purchases  in  Messrs.  Whoopla  and  Bangs  new 
prairie  subdivision  paying  $15  a  foot  for  land  at  a  distance  from  all  improvements, 
although  his  lots,  with  houses  all  around  them,  with  sewers  and  gas  and  water  pipes 
in,  were  offered  at  $12  a  foot.  He  can't  understand  such  conduct  except  on  the 
hypothesis  that  people  have  lost  their  heads  and  are  accepting  for  gospel  truth 
everything  a  dealer  tells  them  so  that  the  biggest  liar  gets  all  the  trade.70 

It  is  little  wonder  that  the  amateur  syndicates  sold  very  few  lots  in 
competition  with  old  established  firms  like  S.  E.  Gross,  who  had  sub- 

66  Ibid.,  November  17,  1889.  M  Ibid.,  April  21,  1889. 

*  Ibid.,  October  6,  1889.  <*  Ibid.  *>  Ibid.,  July  14,  1889. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    167 

divided  sixteen  towns  and  who  had  attracted  an  extensive  clientele  of 
investors,  many  of  whom  had  reaped  large  profits  from  his  earlier  sub- 
divisions. When  it  is  considered  that  in  addition  he  and  other  large 
subdividers  like  E.  A.  Cummings  regularly  ran  half-  or  quarter-page 
advertisements  in  the  newspapers,  that  they  operated  free  excursion 
trains  to  their  properties,  gave  free  lunches,  band  concerts,  fireworks 
displays,  and  bicycle  races  to  entertain  crowds  which  in  the  boom  days 
of  1889  and  1890  were  counted  by  thousands,  it  is  a  matter  of  no  sur- 
prise that  concerns  operating  without  these  attractions  should  have 
failed.  Nor  were  the  foregoing  methods  the  sole  or  even  the  chief 
resource  of  the  large  subdivider: 

The  successful  dealers  employ  devices  and  methods  unsuspected  by  the  uniniti- 
ated. They  do  not  merely  erect  a  shanty  in  the  subdivision,  a  branch  office  with  a 
manager  on  the  grounds,  put  an  advertisement  in  the  Sunday  papers  and  wait  for 
buyers  to  come  to  them.  They  build  the  branch  office  and  do  the  advertising  but 
that  is  only  the  beginning  of  their  work.  They  enlist  an  army  of  drummers  who  can- 
vass the  city,  giving  them  $5  to  $10  commission  for  every  lot  sold.  These  drummers, 
among  whom  are  many  women,  go  diligently  through  stores,  shops  and  factories 
and  they  tell  wonderful  stories  about  values.  Sometimes  they  profess  to  be  selling 
lots  at  $100  in  neighborhoods  where  buyers  of  six  months  ago  are  re-selling  at  $200 
— just  to  close  out  the  subdivision  and  because  the  owner  is  satisfied  with  a  reason- 
able profit.  These  lot  canvassers  are  the  most  polite  and  insidious  drummers  in  the 
field,  and  have  a  great  advantage  over  book  agents  and  miscellaneous  peddlers. 
They  carry  no  suspicious  bundle  and  easily  gain  admittance  where  an  ordinary  ped- 
dler would  be  snubbed.  It  is  through  them  that  the  largest  number  of  lots  is 
sold.71 

As  a  result  of  these  tactics  the  lion's  share  of  the  small  savings  set 
aside  to  be  invested  in  lots  was  captured  by  the  large  and  experienced 
dealer  who  "blew  his  trumpet  loudly."  Nevertheless,  the  large  sub- 
dividers  regarded  the  amateur  acre  syndicates  with  animosity,  not  be- 
cause they  were  successful  in  selling  lots,  but  because  the  members  of 
the  syndicate  would  have  bought  lots  of  the  subdivider  if  they  had  not 
entered  the  syndicate. 

The  end  linked  in  this  speculative  chain,  the  final  consumer,  was 
the  buyer  of  lots  in  the  subdivision.  High  as  the  value  of  acre  tracts 
was  carried  in  the  boom,  the  purchaser  of  a  25-foot  lot  at  retail  paid  for 
his  one-tenth  of  an  acre  a  price  that  was  frequently  from  three  to  ten 
times  as  high  as  the  wholesale  price  in  acres,  and  in  addition  he  usually 
paid  for  most  of  the  improvements.  "Land  in  a  well  known  suburb  cost 
id.,  August  25,  1889. 


i68  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

the  owner  $200  an  acre,  he  spent  as  much  more  on  improvements,  so 
that  the  lots  cost  him  $50  each  and  he  sold  them  for  $150  to  $300  each 
($1,500  to  $3,000  an  acre)  easily."72 

In  the  earlier  stages  of  the  rising  land  market,  prior  to  1889,  a  con- 
siderable proportion  of  these  lots  was  brought  for  actual  use  as  home- 
sites,  in  which  cases  the  saving  in  rent  offset  the  interest  lost  on  the 
capital  invested;  but  in  the  height  of  the  activity  of  1889  and  1890, 
less  than  10  per  cent  of  the  lots  purchased  were  built  upon  and  the 
main  object  of  the  buyer  was  to  sell  again  at  a  profit. 

The  heavy  sales  of  lots  in  subdivisions  in  1889  and  1890  were  due 
to  the  fact  that  prosperous  times  and  full  employment  had  placed 
small  accumulations  of  capital  in  the  hands  of  thousands  of  persons, 
and  that  these  persons  were  led  by  the  boom  psychology  of  the  period 
and  the  persuasive  tactics  of  the  subdividers  to  buy  a  lot  on  easy  pay- 
ments. "North,  south,  and  west  the  opportunities  offered  a  poor  man  to 
buy  a  lot  are  simply  bewildering."73  Under  the  urge  to  buy  something, 
and  without  the  experience  necessary  to  appraise  the  differences  be- 
tween different  sections  of  the  suburban  area,  he  fell  in  with  the  sug- 
gestion of  the  professional  "boomer"  that  he  could  not  make  a  mistake 
if  he  bought  a  lot  anywhere  around  Chicago. 

All  lots  about  Chicago  are  good  things  to  buy,  some  being  merely  a  little  better 
than  others.  This  rosy  view  of  lot  investments  is  shared  by  a  large  percentage  of 
the  public,  by  business  men,  by  clerks,  by  bank  employees,  by  servant  girls,  and 
by  wage  earners  generally.  They  have  heard  that  it  is  advancing,  have  seen  their 
fellows  make  profitable  deals  in  the  last  year  or  so  and  are  convinced  that  he  who 
buys  is  sure  to  win.7* 

Consequently  the  prospective  lot  purchaser  was  ready  to  buy  whatever 
was  offered  by  a  personal  friend  or  by  any  dealer  who  induced  him  to 
attend  an  excursion  at  the  right  moment. 

The  average  lot  buyer  is  sadly  in  need  of  a  counsellor.  He  buys  because  a  friend 
has  bought  or  because  a  dealer  has  treated  him  to  a  picnic  and  assured  him  that 
prices  would  be  raised  all  around  within  a  week  or  because  he  has  suddenly  resolved 
to  save  $5  a  week  and  has  often  heard  it  said  that  nobody  makes  a  mistake  when  he 
puts  money  into  Chicago  dirt.75 

The  result  was  that  he  frequently  was  "danced  or  whooped  into  the 
purchase  of  lots  for  $10  a  foot  which  current  observers  predicted  would 

7Z  Ibid. 

73  Ibid.,  November  24,  1889. 

""Ibid.,  July  7,  1889.  7S  Ibid.,  June  30,  1889. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    169 

not  support  for  ten  years  any  improvements  more  valuable  than  those 
made  by  the  hoe  and  spading  fork."76 

The  probable  aftermath  was  already  being  forecast  in  1889: 

Conservative  men  shake  their  heads  and  declare  that  these  boom  methods  will 
be  followed  by  an  injurious  reaction.  People  will  either  find  their  lots  under  water 
next  spring  or  discover  that  they  promised  to  pay  more  than  a  fair  market  price 
and  will  stop  further  payments  in  disgust.  Having  been  bitten  once,  they  will  not 
only  fight  shy  of  real  estate  dealers  in  the  future  but  will  warn  their  friends  to  be- 
ware of  suburban  lots.77 

In  addition  to  a  belated  discovery  that  he  had  paid  too  much  for  his 
lot,  this  small  land-buyer  was  frequently  confronted  by  a  special  assess- 
ment bill  for  $300  or  $400  to  be  paid  in  one  lump  sum  on  a  lot  which  he 
was  being  taxed  to  the  utmost  to  pay  for  at  the  rate  of  $5.00  or  $10  a 
month.78  If  he  managed  to  pay  all  these  sudden  charges  for  improve- 
ments, for  which  there  was  no  present  need,  and  which  were  installed 
without  his  knowledge  or  consent  by  some  contractor  who  had  received 
a  permit  from  the  City  Council,  the  amateur  land  speculator  some- 
times next  discovered  that  on  the  completion  of  his  final  payment  to 
the  subdivider  he  could  not  get  a  clear  and  unincumbered  lot  because 
the  subdivider  had  failed  to  retire  out  of  the  proceeds  of  his  sales  a 
blanket  mortgage  covering  the  entire  subdivision. 

Land  in  substantially  the  same  locations  was  thus  sold  in  1889,  as  it  had 
been  before  and  since,  at  different  prices  according  to  the  experience 
or  lack  of  experience  of  the  buyer.  It  should  by  no  means  be  inferred 
that  all  or  even  a  majority  of  all  the  lots  sold  in  the  boom  of  1889  or  1890 
were  disposed  of  in  the  manner  above  indicated,  nor  even  that  all  the 
lots  sold  by  subdividers,  even  those  under  water,  proved  to  be  eventual- 
ly unprofitable  to  the  buyers.  Lots  sold  in  old  subdivisions  through 
brokerage  offices  had  a  more  standard  and  stabilized  price,  and  it  was 
this  type  of  lot  that  was  usually  bought  by  business  men  of  greater  ex- 
perience and  larger  resources  than  the  clerical  or  laboring  classes.  More- 
over, some  of  the  lots  in  new  subdivisions  contiguous  to  the  city  proved 
bonanzas.  The  dangers  of  such  wild  and  indiscriminate  buying  of  lots 
to  the  stability  of  the  land  market  will,  however,  be  disclosed  in  the 
aftermath  of  the  boom  or  in  the  period  after  1894. 

As  the  land  boom  had  thus  spread  to  acre  tracts  and  suburban  lots 
during  1889,  it  had  also  seized  upon  central  business  property.  Invest- 

76  Ibid.,  July  7,  1889.  77  Ibid.  78  Ibid.,  April  13,  1890. 


iyo  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

ors  by  the  score  were  bidding  for  downtown  property,79  but  asking 
prices  were  constantly  being  advanced  to  keep  ahead  of  the  advancing 
offers  and  late  in  September  it  was  stated  that  75  per  cent  of  the  prop- 
erty in  the  heart  of  the  city  was  out  of  the  market.80 

Buyers  far  outnumber  sellers.  A  buyer  wastes  time  if  he  goes  around  trying  to 
purchase  property  at  prices  asked  last  spring,  last  summer  or  last  month.  Owners' 
ideas  of  values  are  apt  to  change  each  week  and  their  ideas  are  always  moving  up- 
ward. Owners  have  been  approached  by  so  many  brokers  with  bids  and  with  pro- 
posals for  leases  that  they  feel  independent,  perfectly  confident  of  their  ability  to 
sell  at  terms  which  would  have  seemed  impossible  a  year  ago.  The  enthusiasm  of 
buyers  has  made  owners  optimistic  in  the  highest  degree,  and  negotiations  for  large 
pieces  are  dragging  in  consequence  of  bids  always  being  a  little  under  asking  prices.81 

Since  business  and  office  rents  had  not  advanced,  there  seemed  to  be 
no  basis  for  such  increased  values.  "It  is  generally  admitted  that 
pieces  of  real  estate  have  sold  this  year  for  amounts  much  above  what 
is  warranted  by  the  present  income  received  from  them,  and  in  several 
cases  above  what  they  can  be  made  to  yield  immediately  by  the  best 
possible  impovements."82 

Buyers  in  the  immediate  past  who  had  bought  central  business  prop- 
erty without  stopping  to  reason  about  it,  however,  had  profited,  while 
those  who  had  made  careful  calculations  had  failed  to  gain,  so  head- 
long and  unreasoning  optimism  seemed  the  better  policy.  "Buyers 
have  banked  on  the  future  of  Chicago.  This  has  been  a  safe  and  paying 
thing  to  do  during  the  last  half  dozen  years."83 

The  entire  Chicago  area,  however,  did  not  participate  in  this  upward 
movement,  as  it  did  in  the  case  of  the  earlier  booms.  "The  amount  of 
Chicago  property  is  too  great  to  be  stirred  by  any  speculative  whirl- 
wind. Chicago  still  has  its  booms,  but  they  are  confined  to  districts,  to 
special  classes  of  property,  to  limited  areas."84 

Residential  property  in  old  sections  of  the  city,  for  instance,  was  a 
drug  on  the  market.85  The  near  West  Side  was  not  only  not  having  a 
boom,  but  its  land  values  in  the  region  west  of  Halsted  Street  to  Ash- 
land Avenue  from  Grand  Avenue  to  Madison  Street  were  lower  than 
they  were  twenty  years  before.  Acre  tracts  on  the  North  and  North- 
west sides  had  advanced  only  moderately  in  price,  and  were  being 

"Ibid.,  September  29,  1889. 

80  Ibid.,  September  22,  1889.  ^  Ibid. 

81  Ibid.,  October  13,  1889.  **  Ibid.,  September  8,  1889. 

82  Ibid.,  August  18,  1889.  **  Ibid.,  September  29,  1889. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    171 

offered  for  sale  at  what  a  few  years  later  were  regarded  as  bargain 
rates. 

Ignoring  these  dead  spots,  the  year  1889  closed  with  a  rush  of  busi- 
ness that  was  carried  over  into  the  usually  dull  Christmas  holiday 
season.86  The  aggregate  sales  of  real  estate  as  shown  by  the  recorded 
transfers — $i35,8oo,ooo87 — had  broken  all  previous  records;  and  even 
this  figure  understated  the  case,  for  it  did  not  include  the  large  volume 
of  sales  of  subdivision  lots  made  on  instalment  contracts.  The  number 
of  lots  subdivided  in  Cook  County — 39,997 — also  set  a  new  record. 
Projected  skyscrapers,  elevated  railroads,  belt  lines,  manufacturing 
towns,  and  the  World's  Fair  took  shape  in  the  minds  of  the  public  and 
gave  a  rosy  tint  to  their  hopes. 

The  culmination  of  the  boom,  1890. — The  year  1890  fulfilled  at  its  peak 
period  the  most  fervent  hopes  of  the  land  speculators.  The  World's 
Fair  was  awarded  to  Chicago  by  Congress  on  February  25,  1890. 
Land  values  near  Jackson  Park  advanced  as  much  as  i  ,000  per  cent  in 
the  year,  as  tracts  partly  under  water  south  of  the  park  were  bid  up 
from  $600  to  $6,000  and  even  $15,000  an  acre.88  The  acre  speculation 
around  the  Stickney  tract  and  from  Forty-seventh  to  Ninety-fifth 
Street  from  Western  to  Harlem  avenues  carried  acre  tracts  to  double 
and  triple  their  former  apparently  inflated  values.  The  sale  of  lots  sur- 
passed all  previous  records.  S.  E.  Gross  was  selling  as  many  as  five 
hundred  lots  a  week,  and  on  one  of  his  free  excursions  to  his  subdivi- 
sion Grossdale,  west  of  Chicago,  twenty-seven  coaches  pulled  by  two 
engines  were  required  to  transport  the  three  thousand  people  who  were 
eager  to  buy  lots.89  Five  times  as  many  manufacturers  located  in 
Chicago  in  1890  as  in  any  single  year  before,  and  the  sale  of  acres  and 
lots  near  the  site  of  actual  or  projected  factories  was  at  fever  heat. 
The  "Alley  Elevated"  road  was  being  constructed  between  State  and 
Wabash  Avenue  with  the  result  that  the  value  of  State  Street  frontage 
from  Twenty-second  to  Sixty-third  streets  increased  several  hundred 
per  cent  in  a  few  months.  Projects  for  hotels  and  apartments  for  the 
World's  Fair  were  sending  up  the  value  not  only  of  Michigan  Avenue 
near  Twenty-second  Street  but  of  property  all  over  the  South  Side. 
"It  is  a  poor  neglected  corner  of  the  South  Side  that  does  not  have  its 
hotel  scheme."90  The  skyscrapers  planned  for  the  downtown  office  sec- 

86  Ibid.,  December  29,  1889.  88  Ibid.,  May  25,  1890. 

87  Ibid.,  January  i,  1890.  *9Ibid.,  June  15,  1890.  *°  Ibid.,  April  9,  1890. 


i7 2  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

tions,  and  sales  or  leases  for  projected  buildings,  kept  values  jumping. 
State  Street,  with  seventy-five  hundred  people  passing  hourly  from 
Madison  to  Monroe  Street,  was  at  a  greater  premium  than  ever  before, 
and  those  who  had  a  store  within  two  blocks  of  State  and  Madison 
Street  found  that  the  very  force  of  their  location  inevitably  attracted 
a  great  trade,  while  those  who  moved  away  in  the  hope  that  their 
customers  would  follow  them  into  the  next  block  were  glad  to  pay  a 
bonus  to  get  back.  The  owners  of  Wabash  Avenue  property  were  look- 
ing to  the  South  Side  Elevated  Railroad,  then  having  its  projected 
terminus  at  Wabash  and  Congress  street,  as  "the  Moses  that  would 
lead  them  out  of  the  wilderness."  Property  along  Michigan  Avenue 
south  of  Madison  Street  had  come  into  great  demand  for  hotel  purposes, 
especially  after  the  completion  of  the  Auditorium  in  1889,  because  of  its 
freedom  from  the  heavy  traffic  of  the  downtown  area,  and  its  values 
had  risen  to  an  amazing  degree.  The  wholesale  quarter  southwest  of 
Jackson  and  Wells  Street  was  building  up  rapidly.  On  the  West  Side 
speculators  were  buying  land  west  of  Halsted  and  Jackson  streets  in  the 
expectation  that  the  light  manufacturing  district  would  spread  west- 
ward. The  new  cable  line  on  Madison  Street  to  Crawford  was  infus- 
ing some  activity  into  that  street.  Northward,  the  rise  of  the  Lake 
Shore  Drive  and  the  streets  adjacent  to  it  to  a  position  of  social  emi- 
nence and  of  high  land  values  was  now  an  accomplished  fact.  The  com- 
pletion of  the  new  Sheridan  Road  to  Waukegan  had  also  stimulated 
activity  along  the  North  Shore. 

In  the  general  rush  and  feverish  scramble  in  so  many  sections  of  the 
city  and  the  surrounding  suburbs,  the  seven  thousand  vacant  houses  in 
the  near  West  Side  were  lightly  passed  by.  In  the  favorite  scenes  of 
speculative  activity,  sales  were  made  so  fast  that  half-a-dozen  transfers 
of  contracts  to  purchase  were  sometimes  made  before  one  deed  was 
recorded.  Buyers  were  in  such  a  hurry  to  get  the  property  that  they 
neglected  many  formalities  of  title  examination.  In  the  general  excite- 
ment there  was  much  sharp  dealing  bordering  on  actual  fraud.  Taking 
advantage  of  the  faith  and  confidence  of  the  public  in  the  accuracy  of 
the  considerations  expressed  in  the  deeds  of  conveyance  which  were 
recorded  and  published  in  the  newspapers,  sales  were  made  in  many 
cases  at  fictitious  considerations  to  dummy  buyers  for  the  purpose  of 
creating  the  impression  of  activity  and  advancing  prices.  The  ruse  was 
frequently  successful,  as  buyers  rushed  to  any  spot  that  appeared  to  be 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    173 

going  up  in  value.  Again  there  were  many  cases  of  "scalping"  un- 
noticed at  the  time  but  the  details  of  which  came  out  in  the  aftermath 
of  the  boom.  Some  of  the  unscrupulous  "curbstone"  brokers,  who  had 
been  attracted  to  Chicago  by  the  boom,  sometimes  contrived  to  make 
more  than  a  regular  commission  by  selling  the  property  intrusted  to 
them  at  a  higher  price  than  was  paid  to  the  owner  and  by  keeping  the 
difference.  Again  there  were  cases  of  property  being  sold  at  an  abnor- 
mally high  price  on  the  strength  of  a  fictitious  lease,  by  which  an  irre- 
sponsible confederate  of  the  seller  agreed  to  pay  an  unusually  high  rent 
for  the  property. 

Such  were  the  components  of  the  real  estate  market  of  Chicago  of 
1890.  Good  and  bad  elements  were  hopelessly  mixed  together  and 
anyone  was  regarded  as  a  traitor  to  Chicago  who  questioned  any  part 
of  the  process  that  was  making  so  many  people  rich.  The  apex  of  the 
boom  was  reached  in  June,  July,  and  August,  when  the  volume  of 
weekly  and  monthly  sales  broke  all  past  records.  At  last,  in  early  Sep- 
tember, there  came  the  report  that  Washington  Park  might  be  used  for 
the  World's  Fair,  whereupon  buyers  on  options  and  most  slender  mar- 
gins undertook  to  boost  the  prices  of  Cottage  Grove  Avenue  frontage 
from  Forty-ninth  to  Sixtieth  streets  from  $100  to  $200  to  $300  to  $500 
a  front  foot. 

This  proved  to  be  the  last  phase  of  the  boom.  The  failure  of  the 
Baring  Brothers  in  London  precipitated  a  serious  financial  stringency 
in  September.  The  banks  suddenly  refused  to  make  loans  for  the  pur- 
pose of  purchasing  real  estate,  although  the  borrower  was  allowed 
funds  for  other  uses.  "The  blandishments  of  real  estate  agents  fall 
pointless  against  a  stringent  money  market,"  was  the  current  comment 
in  September.  By  November  there  was  a  financial  panic.  The  Wash- 
ington Park  boom  had  collapsed  in  October  and  the  effect  of  a  fall  of 
"300  per  cent"  in  values  there,  as  one  naive  statistician  put  it,  had  a 
chilling  effect  on  the  hitherto  confident  belief  that  the  boom  values 
would  not  decline.  By  December  there  was  no  active  real  estate  mar- 
ket in  the  sense  that  speculation  was  active.  "Sales  have  come  to  a 
sharp  halt.  Negotiations  even  are  silenced."91 

At  the  close  of  the  year,  the  situation  was  reviewed  in  which  annual 
sales  in  Cook  County  had  reached  the  record-breaking  total  of  $237,- 
83i,ooo,92  in  which  40,000  lots93  had  been  subdivided  and  a  considerable 

91  Ibid.,  December  7,  1890.       "2  Ibid.,  January  i,  1891.       « Ibid.,  September  21,  1890. 


174  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

proportion  of  them  sold  in  the  first  six  months  of  the  year,  in  which  single 
firms  like  Snow  and  Dickinson  had  sold  $7,500,000  worth  of  property, 
and  in  which  all  brokers,  even  those  of  the  curbstone  variety,  had  made 
money.  The  fortunes  made  by  some  read  like  romances.  Notwith- 
standing the  sharp  check  in  operations  beginning  in  September,  there 
was  still  a  confident  belief  that  activity  would  revive  in  the  spring  of 
1891.  If  general  business  conditions  did  not  improve,  Chicago  at  least, 
on  account  of  its  coming  World's  Fair,  was  expected  to  be  a  bright  ex- 
ception to  conditions  elsewhere.94  Great  store  was  placed  on  remarks 
by  Chauncey  Depew  as  to  the  vast  amount  of  money  the  Fair  would 
put  in  circulation  in  Chicago.  Consequently,  while  considerable  anx- 
iety was  felt  by  the  purchasers  of  tracts  aggregating  thousands  of 
acres  as  to  whether  they  would  be  able  to  sell  their  holdings  before  the 
next  payment  came  due,95  there  were  no  reductions  in  asking  prices,  and 
holders  of  improved  property  were  even  more  confident. 

The  gains  in  land  value  from  the  beginning  of  1889  to  the  beginning 
of  1891  had  been  far  greater  than  in  the  preceding  six  years,  particu- 
larly in  the  case  of  central  business  property  and  first-class  residential 
property  made  accessible  by  fast  transportation,  but  the  value  of  land 
occupied  by  cheap  homes  had  declined  because  of  the  increased  com- 
petition of  suburban  land.  Table  VII,  the  data  for  which  were  pre- 
pared by  Frank  R.  Chandler,  indicates  the  percentage  of  change  for 
different  types  of  property.96 

It  will  be  seen  that  cheap  houses  are  cheaper  now  than  ten  years  ago.  So  they 
are,  because  more  land  has  been  brought  into  requisition,  also  that  property  under 
the  head  of  office  buildings  is  as  high  as  the  best  retail  business.  This  is  the  result 
of  high  buildings  mainly.  First  class  residence  property  4^  miles  out  is  just  as  de- 
sirable as  property  three  miles  out.  This  is  due  to  improved  transit  facilities  and 
the  rapid  growth  and  extension  of  the  business  districts.  The  average  increase  in 
values  since  1889  approximately  given  is  from  100  to  200  per  cent  and  in  exceptional 
cases  an  increase  of  300  to  400  per  cent  has  been  made. 

The  beginning  of  the  lull,  1891. — The  real  estate  speculators  discov- 
ered in  1891  that  checking  the  boom  of  1890  in  mid-career  had  changed 
the  temper  of  the  market  and  that  the  one-time  buoyant  optimism 
could  not  be  revived. 

94  Ibid.,  December  7,  1890.  9S  Ibid.,  September  14,  1890. 

*>  Real  Estate  and  Building  Journal,  April  4,  1891.  Since  the  figures  for  1879  are  average 
and  not  maximum  values,  the  lower  figures  for  1891  are  taken  in  computing  the  percentage 
of  increase.  This  minimizes  the  extent  of  the  actual  advance. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    175 


No  train  of  transactions  will  be  brought  to  an  absolute  halt  by  unfavorable 
events  as  quickly  as  real  estate  transactions.  The  financial  disturbances  of  last  fall 
stopped  almost  completely  for  a  time  these  speculative  operations.  The  influence  of 
that  crisis  has  nearly  departed,  but  it  left  the  country  in  a  far  different  temper  from 
that  of  a  year  ago.  The  sanguine  optimists  have  become  conservative.  So  long  as 
there  is  a  speedy  turning  over  of  property  at  advancing  values  the  speculative  real 
estate  operator  has  little  thought  of  the  point  prices  have  reached.  When  that 
movement  has  stopped  for  a  time  and  holders  of  property  whose  equity  is  repre- 
sented by  only  a  narrow  margin  have  exhausted  themselves  in  searching  for  a  buyer, 
it  is  not  only  discouraging  to  see  how  slow  it  is  to  market  a  piece  of  realty,  but  their 
fate  warns  other  men.97 

TABLE  VII 
VALUE  OF  CHICAGO  LAND  BY  PRINCIPAL  USES,  1879-91 


CLASS  OF  PROPERTY 

DOLLARS  PER  FRONT  FOOT 

PERCENT- 
AGE OF 
INCREASE 
1879-91 

Jan.  i,  1891 

Jan.  i, 

1889 

Jan.  i, 
1883 

Jan.  i, 
1879 

First-class  retail,  central  

$7,  ooo-$  10,000 
7,000-  10,000 
2  ,  ooo-     5  ,  ooo 
600-     i  ,  ooo 

800-     1,000 
250-        400 
250-        400 
250-        400 

125-        300 
450-        600 

350-        450 
7-          20 
75-         loo 

$4,000 
3,000 
2,000 
600 

800 
200 
175 
150 

125 
250 

500 
25 
85 

$1,500 
2,OOO 
1,500 
400 

600 

ISO 
125 
IOO 

80 

2OO 

400 
2O 
60 

$1,500 
I,  IOO 

600 
300 

250 

95 
70 
75 
60 

IOO 

250 

IO 

40 

367 
536 
233 

IOO 
220 
I63 
257 
233 

108 
350 

40 
decrease 
90 

Banks  and  offices  

Wholesale  business  

Local  business  centers  

Aristocratic    residence,     South 
Side           

First-class      residence,      South 
Side,  3  miles  
First-class      residence,      South 
Side  3^  miles 

First-class      residence,      South 
Side,  4  miles     .        .... 

First-class      residence,      South 
Side,  4!  miles  

First-class  residence,  West  Side 
Aristocratic    residence,    North 
Side 

Cheap  homes   

Fashionable  suburban  

Farming  lands,  Cook  and  DuPage  counties,  $2oo-$i,ooo  and  $2,000  an  acre. 

A  large  number  of  people  had  now  purchased  real  estate  which  they 
could  not  sell,  and  that  required  further  outlay  on  their  part  to  keep  up 
the  payments  of  principal  and  interest  as  well  as  of  taxes  and  assess- 
ments. The  funds  available  for  purchasing  more  property  were  thus 
curtailed,  and  they  were  further  reduced  by  a  decline  in  the  number 
employed  in  manufactures  and  the  falling-off  in  business  profits. 
Potential  buyers,  seeing  that  land  near  the  World's  Fair  ground  and  the 

97  Chicago  Tribune,  May  17,  1891. 


176  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

Alley  Elevated  that  people  rushed  to  buy  in  1890  could  still  be  bought 
at  no  material  advance,  were  now  in  no  hurry  to  make  commitments.98 
Announcements  of  new  projects  and  even  the  completion  of  many 
enterprises  had  lost  their  potency  to  stampede  the  buyers.  "The  an- 
nouncement of  enterprises  and  negotiations  under  way  which  would 
have  caused  a  sensation  during  the  summer  of  1890  was  received  in 
1891  without  causing  the  slightest  stir  in  realty  circles."99  Buyers  now 
took  more  time  in  examining  abstracts,  and  they  were  careful  to  look 
into  all  phases  of  the  deal,  as  the  buyers  of  1890  were  indulging  in  re- 
criminations and  complaints  about  scalping  and  imperfections  in  their 
titles.  Land  values  were  nominally  higher  than  ever,  and  the  volume 
of  recorded  sales  was  not  far  below  the  peak  level  of  1890,  but  this  ap- 
pearance was  deceptive.  There  were  many  exchanges  of  property  at 
inflated  considerations  in  which  two  parties,  unable  to  sell  their  hold- 
ings for  cash,  traded  with  each  other  at  abnormally  high  considerations 
on  both  sides.  It  was  further  estimated  that  as  much  as  half  of  the 
deeds  recorded  in  1891  were  the  result  of  deals  made  in  1890  which 
involved  the  carrying-out  of  contracts  made  in  the  earlier  year.100 

As  yet  there  were  few  signs  of  actual  decline  in  values.  The  pur- 
chasers of  acres  and  lots  were  still  struggling  to  keep  up  their  payments, 
and  if  they  could  not  pay  these  sums  promptly,  they  found  their  cred- 
itors lenient;  for  the  former  owners  did  not  want  the  property  back,  and 
they  knew  that  under  the  foreclosure  law  it  would  take  them  eighteen 
months  to  secure  the  title  and  to  wipe  out  the  equity  of  the  mort- 
gagor.101 

Some  of  the  speculative  bubbles  had  already  been  pricked.  The 
Stickney  acres  were  in  ill  repute;  the  projected  removal  of  the  packing 
plants  to  Tolleston  was  now  referred  to  as  a  fiasco.102  Acre  tracts  were 
a  drug  on  the  market,  an  inquiry  for  one  such  tract  bringing  in  eighty 
replies  and  offering  a  total  of  2,500  acres,  half  of  which  was  located  in 
new  manufacturing  towns  such  as  Harvey,  Hammond,  Stickney, 
Chicago  Heights,  South  Chicago,  and  Wireton  Park.103  The  sale  of  lots 
in  subdivisions  had  decreased  drastically.  S.  E.  Gross  sold  only  129  lots 
during  the  week  ending  July  26,  1891,  as  compared  with  529  for  the 
same  week  a  year  before.104  In  one  case  where  a  dozen  carloads  of 

**Ibid.,  June  28,  1891.  I01  Ibid.,  May  3,  1891. 

"Ibid.,  July  30,  1893.  I02lbid.,  August  23,  1891. 

100  Ibid.,  June  7,  1891.  1(*  Ibid.,  July  26,  1891.  I0i  Ibid. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    177 

prospective  purchasers  were  taken  to  a  South  Side  subdivision  under 
conditions  that  would  have  insured  the  sale  of  hundreds  of  lots  in  1890, 
only  a  few  lots  were  sold.105  There  were  too  many  agents  trying  to  make 
deals,  with  the  result  that  the  commissions  were  split  up  among  too 
many  to  be  profitable  to  any  one.  Many  negotiations  were  broken  off 
because  "a  friend  of  one  of  the  parties"  to  a  deal  who  was  in  the  real 
estate  business  advised  against  it  in  order  to  promote  a  sale  of  his 
own.106 

Notwithstanding  these  drawbacks,  many  sales  were  negotiated  in 
1891,  but  they  were  for  actual  use  rather  than  for  speculative  resale. 
Purchases  were  made  downtown  for  sites  for  sixteen-story  buildings, 
and  on  the  South  Side  for  apartment  or  hotel  sites. 

Despite  the  decline  in  the  sales  of  subdivision  lots,  the  number  of 
lots  subdivided  in  1891  in  Cook  County  far  exceeded  all  previous  rec- 
ords with  a  total  of  m,ooo.107  Only  a  small  percentage  of  this  number 
was  sold.  The  volume  of  building  activity,  augmented  by  the  erection 
of  skyscrapers  and  the  building  of  apartments  and  hotels  on  the  South 
Side  for  the  World's  Fair,  also  reached  a  new  peak,  having  increased 
from  a  total  of  $25,000,000  in  1889  to  over  $47,000,000  in  1890  and 
$54,000,000  in  1891.  Those  who  had  purchased  land  at  high  valuations 
were  persuaded  to  build  in  order  to  earn  something  on  their  invest- 
ment. Others  were  induced  to  erect  buildings  under  the  most  extrava- 
gant notions  as  to  the  income  they  would  yield  during  the  World's 
Fair.  One  advertisement  contained  the  assuring  estimate  that  four 
rooms  in  an  ordinary  six-room  house  would  earn  $5,760  in  the  six 
months  of  the  Fair.108 

This  building  activity  reached  a  new  peak  in  1892,  when  the  total 
volume  amounted  to  $63,463,4oo.109  Wages  and  materials  costs  were 
forced  upward  20-25  per  cent110  under  this  intense  demand  combined 
with  the  demand  created  by  the  construction  of  the  Fair  buildings,  so 
that  the  buildings  of  this  year  were  erected  at  an  abnormally  high  cost. 

IO*Ibid.,  July  5,  1891.  Io6  Ibid.,  July  19,  1891. 

107  Computation  of  the  editor  of  the  Real  Estate  and  Building  Journal,  June  9,  1894. 
Another  authority  gave  a  total  of  79,803  for  Cook  County  and  115,892  for  the  Chicago 
Metropolitan  Region  in  1891. 

108  Chicago  Tribune,  April  n,  1891.  Advertisement  of  E.  A.  Cummings  of  house  at 
Forty-first  and  Ellis  Avenue. 

109  Annual  reviews  of  the  Economist  (1891-97). 

110  Chicago  Tribune,  November  13,  1892. 


i78  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

Speculation  in  ninety-nine-year  leases  as  a  prelude  to  the  erection  of 
skyscrapers  and  hotels  also  reached  a  peak  in  1892,  the  value  of  prop- 
erty so  leased  amounting  to  $12,000,000  as  compared  with  $10,000,000 
in  1890  and  $8,700,000  in  1891. *" 

The  market  of  1892  was  thus  partly  sustained  by  record-breaking 
building  activity,  by  speculation  in  downtown  leases  in  which  certain 
operators  leased  whole  floors  and  sublet  them  at  a  profit,  by  the  con- 
struction of  the  Alley  Elevated  Railroad,  and  by  the  plans  for  the 
Metropolitan  Elevated  Railroad  on  the  West  Side.  The  organization 
of  the  University  of  Chicago  also  exerted  an  influence  on  the  real 
estate  market:  first,  because  the  section  selected  by  the  professors  for 
their  homes  was  expected  to  create  a  choice  residential  center  that 
would  be  fashionable  because  of  its  aristocracy  of  learning;112  and,  sec- 
ond, because  the  announced  plan  of  the  trustees  to  invest  part  of  the 
endowment  of  the  University  in  property  in  the  central  business 
district  enhanced  the  investment  prestige  of  that  territory.113  On  the 
whole,  however,  even  with  these  favorable  factors,  land  values  in  the 
centers  that  had  been  whirlwinds  of  activity  in  1890  were  drifting 
toward  complete  stagnation."4  The  collapse  of  the  cheap-lot  mar- 
ket and  the  failure  of  the  great  schemes  for  railroad  yards  and  manu- 
facturing plants  had  almost  destroyed  the  cash  market  for  acre  tracts."5 
The  number  of  lots  subdivided  fell  from  110,000  in  1891  to  65,000  in 
1892.  In  the  downtown  section  the  supply  of  office  space  was  being 
increased  faster  than  the  demand.  Foreclosures,  while  still  few,  were 
increasing  in  number. 

The  onset  of  the  panic,  1893. — The  year  when  the  World's  Fair  opened 
was  also  the  year  of  the  panic  of  1893.  The  prospect  at  the  beginning 
of  the  year  was  none  too  bright,  but  when  the  belated  World's  Fair 
guests  failed  to  fill  the  hotels  that  were  built  for  their  reception  and  when 
they  failed  to  respond  to  invitations  to  inspect  real  estate,  the  Chicago 
land  market  was  in  the  dumps  even  when  the  Midway  and  the  Court 
of  Honor  were  packed  with  dense  throngs.  The  peak  values  were  still 
maintained,  and  there  was  no  break  in  prices  because  a  scaling-down 
of  prices  did  not  attract  many  buyers."6  There  was  a  great  difference 
between  the  bid  and  asked  prices,  the  owners  not  being  inclined  to 

»'  Ibid.  "4  Ibid.,  September  25,  1892. 

113  Ibid.,  October  30,  1892.  »s  Ibid. 

"3  Ibid.,  December  4,  1892.  »6  Ibid.,  July  30,  1893. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    179 

make  sacrifices  and  the  purchasers  looking  for  bargains.117  "The  whole 
city  practically  is  for  sale  but  not  at  bargain  counter  prices.""8 

The  last  six  months  of  1893  were  far  worse  than  the  first  half  of  the 
year.  When  the  World's  Fair  crowds  departed,  the  almost  empty  flats 
and  hotels  near  the  grounds  quickly  passed  into  the  hands  of  receivers, 
and  as  rents  were  cut  sharply  to  attract  tenants,  the  overbuilt  condi- 
tion of  the  city  as  regards  flats  was  emphasized.  The  rapid  increase  in 
unemployment,  as  factories  curtailed  operations  and  as  the  volume  of 
building  dropped  from  over  sixty-three  to  twenty-eight  million  dollars, 
forced  people  to  double  up  in  their  living  quarters.  The  termination  of 
World  Fair  projects,  and  the  contraction  of  firms  into  smaller  quarters 
reduced  the  demand  for  office  space  at  the  very  time  when  its  supply 
was  being  greatly  increased  by  the  completion  of  a  number  of  new 
skyscrapers. 

There  were  bright  spots  in  the  picture,  however.  Store  rents  on 
State  Street  near  Madison  had  trebled  since  1889  and  land  values 
throughout  the  central  business  district  showed  no  inclination  to  de- 
cline. While  the  prices  of  lots  on  Grand  and  Drexel  boulevards  from 
Thirty-ninth  to  Fifty-first  Street  were  cut  in  a  few  instances  to  raise 
cash  during  the  panic,  this  reaction  was  but  temporary;  and,  under  the 
influence  of  the  building  of  many  fine  homes  along  these  thoroughfares, 
land  values  had  increased  from  25  to  75  per  cent  over  1890  prices  by 
1895.  The  North  and  Northwest  sides  scarcely  felt  the  depression,  for 
their  boom  was  only  about  to  begin.  The  depression  particularly  affect- 
ed those  portions  of  the  South  and  Southwest  sides  where  speculation 
had  been  most  intense  in  1890.  The  panic  of  1893  marked  the  begin- 
ning of  the  passing  of  the  South  Side  as  the  leader  of  fashion  and  of  real 
estate  speculation. 

The  condition  of  the  scenes  of  speculative  excitement  of  1890 
steadily  grew  worse  from  1894  to  1898.  In  1894  the  first  drastic  cuts  in 
real  estate  selling  prices  were  made  when  weak  holders  accepted  a  30 
per  cent  reduction  from  the  prices  of  1890  for  lots  on  South  Side  ave- 
nues."9 Real  estate  values  were  apparently  being  maintained  in  1895 
when  there  was  a  brief  recovery  in  general  business  conditions,  but  a 
majority  of  the  recorded  transfers  were  said  to  be  masters'  sales  or 

"i  Ibid.,  July  9,  1893. 

118  Ibid.,  July  2,  1893. 

119  Real  Estate  and  Building  Journal,  August  25,  1894. 


iSo  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

sales  to  avoid  foreclosure.120  However,  another  panic  on  the  stock 
market  late  in  1895  intensified  the  depression  in  real  estate  by  1896, 
particularly  that  in  vacant  lots.  At  last  there  were  no  more  excursions 
to  take  prospective  lot-buyers  to  subdivisions.121  "The  demand  for 
vacant  property  is  at  the  lowest  ebb  in  the  history  of  the  city.  Nine  out 
of  the  dealers  in  suburban  property  said  there  was  absolutely  nothing 
doing  and  there  was  no  indication  of  a  demand  for  vacant  lots."122  By 
this  time  a  majority  of  the  buyers  of  lots  on  easy  payments  had  lost 
their  holdings  and  had  nothing  to  show  for  their  investment.  "Other 
real  estate  dealers  said  that  in  some  localities  two-thirds  and  perhaps 
three-fourths  of  the  lots  sold  in  good  times  had  been  sold  on  fore- 
closure and  that  nine- tenth  of  the  cheap  lots  sold  on  easy  payments  had 
been  sold  for  taxes  and  special  assessments."123 

In  1896  taxes  had  been  increased  33-50  per  cent124  and  this  burden 
was  most  inequitably  distributed  as  between  persons  and  districts,  as- 
sessed values  varying  from  4  to  64  per  cent  of  true  value  in  the  central 
business  district125  and  in  other  cases  ranging  from  i  to  100  per  cent  of 
true  value.  The  method  of  allowing  contractors  to  instal  improvements 
to  be  paid  for  by  special  assessments  in  any  territory  in  which  they 
could  secure  the  consent  of  the  City  Council  had  resulted  in  evils  that 
were  a  constant  source  of  complaint.  Sidewalks  were  built  where  there 
was  no  one  to  walk  on  them,  and  water  pipes  were  extended  to  sections 
where  there  were  only  one  or  two  families  to  the  mile.126  A  thousand 
boulevard  lamps  were  erected  in  the  swamps  of  the  Calumet  region. 
It  is  little  wonder  that  the  weight  of  such  burdens  had  crushed  the 
small-lot  purchasers  and  that  the  number  of  lots  subdivided  de- 
clined from  111,000  in  1891  to  3,500  in  1898. 

By  1896  real  estate  was  in  such  a  dull  and  disorganized  condition 
that  land  values  were  difficult  if  not  impossible  to  determine  in  many 
cases.  "In  the  absence  of  sales  enough  to  show  a  demand  for  real  estate, 
the  market  must  be  a  mere  matter  of  opinion  and  when  it  gets  so  dull 
that  a  majority  of  the  agents  say  that  they  cannot  even  hazard  an 

120  Ibid.,  November  16,  1895. 

121  Ibid.,  June  6,  1896. 

122  Ibid.,  November  21,  1896.  I2'  Ibid. 
I2<  Ibid.,  May  30,  1896. 

125  Ibid.,  May  9,  1896  (Mayor  Swift's  Tax  Commission  report). 

126  Ibid.,  August  i,  1896. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    181 

opinion,  it  is  certainly  very  quiet."127  The  morale  of  the  once  optimistic 
real  estate  brokers  had  declined  to  a  very  low  ebb  and  their  talk  now 
discouraged  prospective  customers.  "By  far  the  most  hurtful  of  all  are 
the  depressed  feeling  and  discouraging  talk  of  the  brokers.  Many  of 
them  are  disheartened  and  some  of  them  are  in  straightened  circum- 
stances."128 The  volume  of  recorded  sales  did  not  indicate  that  there 
was  any  real  activity  in  the  market,  for  "some  estimate  that  not  more 
than  one-third  of  the  transfers  reported  are  entitled  to  be  considered 
as  a  result  of  a  demand  for  real  estate,  the  other  two-thirds  being 
credited  to  exchanges,  liquidations  of  debts,  etc."129 

The  worst  point  in  the  depression  was  not  reached  in  1896,  however, 
for  in  1897  it  was  said  that  "real  estate  is  a  liability  instead  of  an  asset" 
and  that  it  had  declined  25  per  cent  in  value  during  the  year.130  Fore- 
closures as  indicated  by  the  judicial  sales  at  the  Chicago  Real  Estate 
Board  were  increasing  every  year  and  did  not  reach  their  peak  until 
1898,  as  the  Table  VIII  shows.131 

TABLE  VIII 

VALUE  OF  PROPERTIES  SOLD  AT  JUDICIAL  SALES  IN  CHICAGO,  1892-99 

1892  (beginning May  i). .  $2,537,262  1896 $10,697,288 

1893 4,182,603  1897 13,380,240 

1894 6,967,192  1898 13,609,858 

1895 8,256,527  1899 11,821,711 

During  this  very  period  of  intense  depression,  however,  an  improve- 
ment was  taking  place  in  the  transit  facilities  of  the  central  business 
district  and  of  the  West  and  North  sides  that  was  to  have  both  an  im- 
mediate and  an  ultimate  effect  on  their  land  values.  These  influences 
must  now  be  considered. 

F.   NEW  TRANSPORTATION  LINES,  1894-98 

The  period  from  1894  to  1898  was  marked  by  the  building  of  many 
new  transportation  lines,  both  elevated  railroads  and  electric  surface 
lines,  on  the  North  and  West  sides.  The  Lake  Street  elevated  railroad, 
which  had  begun  operation  on  the  West  Side  late  in  1893,  was  extended 
from  Market  Street  to  State  Street  in  October,  1894.  The  Metropolitan 
elevated  made  rapid  progress  in  1895,  the.  Garfield  Park  branch  being 

"ilbid. 

J2*Ibid.,  May  16,  1896.  w  Ibid.,  June  12,  1897. 

129  Ibid.  I31  Annual  review  in  the  Economist  (1900). 


182  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

completed  from  Franklin  to  Cicero  Avenue,  the  Logan  Square  branch 
finished  to  Logan  Square,  the  Humboldt  Park  branch  built  to  Lawn- 
dale  Avenue,  and  the  Douglas  Park  branch  constructed  to  Eighteenth 
Street.132  The  route  of  the  Northwestern  Elevated  Railroad  line  was 
surveyed  to  Wilson  Avenue  in  1893  and  construction  was  begun  in 
i8g6.133  In  1895  and  1896  many  new  electric  surface  lines  were  built 
on  the  North  and  Northwest  sides,  particularly  on  Belmont,  Irving 
Park,  and  Lawrence  avenues,  and  territory  that  had  the  worst  trans- 
portation before  now  secured  the  best.  A  rapid  conversion  of  horse- 
car  lines  into  electric- trolley  systems  was  also  taking  place  in  these 
years  until  in  1897  the  South  Side  surface  lines  had  only  7.5  miles  of 
horse-car  lines  compared  with  141.5  miles  of  electric  and  30  miles  of 
cable  lines,  and  the  West  Side  lines  had  only  6.5  miles  of  horse-car  lines 
compared  with  165.5  miles  of  electric  and  30  miles  of  cable  lines.134 
The  promises  of  improved  transportation  made  in  the  boom  of  1890 
had  been  fulfilled,  but  the  actual  construction  of  the  new  lines  did  not 
produce  the  effect  on  land  values  in  the  depressed  market  from  1894  to 
1898  that  the  mere  promises  of  such  facilities  had  exerted  on  the  ex- 
cited land  market  of  1890.  Mr.  Yerkes,  who  was  promoting  the  North 
Side  lines,  was  however,  even  in  1895,  forming  syndicates  to  purchase 
land  along  the  route  of  the  new  electric  surface  lines;  and  the  new  means 
of  electric  transit — both  surface  and  elevated — were  to  exert  a  marked 
influence  on  the  rise  in  land  values  on  the  North  and  Northwest  sides  in 
the  next  few  decades. 

Meanwhile,  the  location  of  the  downtown  termini  of  the  three  ele- 
vated lines  already  constructed — the  South  Side  elevated  line,  the 
Metropolitan  elevated,  the  Lake  Street  elevated,  and  the  projected 
Northwestern  elevated — was  in  1895  exerting  a  powerful  influence  on 
the  values  of  land  in  the  central  business  district.  The  new  elevated 
roads  were  carrying  passengers  into  the  downtown  area  to  shop  who 
had  formerly  patronized  stores  on  West  Madison  Street,  Twenty-second 
Street,  and  Milwaukee  Avenue.  Rents  of  stores  on  these  streets  were 

133  Statement  of  J.  V.  Sullivan,  assistant  to  the  president,  Chicago  Surface  Lines,  to  the 
writer  in  1932. 

133  Emil  Rudolph,  who  surveyed  the  route,  in  a  statement  to  the  writer  in  August,  1933, 
said  that  he  was  instrumental  in  selecting  the  route  that  was  followed,  as  he  persuaded 
Lauderback  not  to  construct  the  line  to  Lincoln  Park  but  to  tap  the  territory  farther  west 
that  lacked  transportation  facilities. 

134  Statement  of  J.  V.  Sullivan  to  the  writer  in  1932. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    183 

lower  in  1895  than  in  1889  while  on  State  Street  near  Madison  Street 
business  rents  had  tripled.  The  exact  route  of  each  of  these  lines  into 
the  downtown  area  was  a  matter  of  great  concern  to  owners  of  land  on 
the  various  streets  in  that  section.  When  the  Lake  Street  elevated  was 
finally  extended  to  State  Street,  it  was  found  that  the  thirty  to  forty 
thousand  passengers  poured  daily  from  the  stations  at  Wells,  Clark, 
and  State  streets  greatly  increased  the  business  of  the  stores  on  these 
streets  running  at  right  angles  to  Lake  Street,  but  that  they  did  not 
stop  at  all  at  the  inside  stores  on  Lake  Street,  which  were  therefore 
injured  by  the  noise  of  the  elevated  structure  without  receiving  any 
benefit  in  return.135  Some  of  the  owners  of  the  Wabash  Avenue  prop- 
erty were  therefore  inclined  to  oppose  the  extension  of  the  South  Side 
elevated  lines  from  Congress  Street  north  to  Lake  Street,  but  there 
were  others  at  the  north  end  of  Wabash  Avenue  who  were  anxious  to 
secure  the  benefit  of  the  traffic  that  was  poured  out  at  Congress  Street, 
so  the  consent  of  the  property  owners  was  finally  obtained.  Instead  of 
each  elevated  line  constructing  its  own  loop  in  the  downtown  area,  as 
was  first  proposed,  plans  for  a  union  loop  were  considered  in  1895. 
Several  possible  routes  were  discussed,  some  contemplating  elevated 
lines  as  far  east  as  Michigan  Avenue  and  as  far  west  as  Franklin  Street. 
The  building  of  lines  that  could  be  used  for  two  sides  of  the  Loop  on 
Lake  Street  and  Wabash  Avenue  was  followed  by  the  construction  of 
the  Van  Buren  and  Wells  Street  sides.  On  October  12,  1897,  the 
Union  Loop  was  opened.  The  benefit  was  so  pronounced  to  the  prop- 
erty lying  within  the  Loop  that  "the  Loop"  became  a  synonym  for  the 
high- value  zone  or  the  central  business  district  of  Chicago,  while  prop- 
erty owners  outside  the  golden  circle  "cursed  the  Loop  as  a  Chinese 
Wall  that  stopped  the  natural  expansion  of  the  central  business  area. 
Meanwhile,  a  cable  line  on  Blue  Island  Avenue  that  entered  the  down- 
town area  through  a  tunnel  on  Van  Buren  Street  had  after  1894  been 
a  large  factor  in  promoting  activity  in  the  south  end  of  the  central 
business  district. 

The  construction  of  the  new  elevated  lines  and  the  completion  of  the 
Union  Loop  so  increased  the  business  of  retail  merchants  on  State  Street 
that  there  was  no  decline  but  even  a  slight  advance  in  land  values  along 
State  Street  during  this  period  of  otherwise  extreme  depression.  In  fact, 
a  new  high  record  for  land  values  was  made  in  1896  when  the  corner  of 

™  Real  Estate  and  Building  Journal,  December  7,  1895. 


184  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

State  and  Madison  was  leased  for  $50,000  a  year — only  slightly  less 
than  was  paid  for  the  entire  corner  seventeen  years  before.  This  sale 
established  a  value  of  $18,000  a  front  foot  for  this  peak-value  corner 
of  Chicago. 

While  land  values  in  all  parts  of  the  central  business  districts  were 
firmly  maintained,  the  effect  of  the  depression  was  felt  here  as  well  as 
in  the  suburban  areas  of  the  South  Side.  Most  of  the  speculators  in 
business  leases  were  forced  into  bankruptcy  by  1897,  for  they  had  con- 
tracted to  pay  higher  rent  than  the  stores  could  be  made  to  pay.  The 
"fad"  of  constructing  high  office  buildings  was  overdone  by  1894.  A 
considerable  number  of  the  new  skyscrapers  started  in  prosperous 
times  were  not  ready  for  occupancy  until  after  the  panic  of  1893. 
Office  rents  were  greatly  reduced,  agents  scoured  the  streets  for  ten- 
ants, tenants  were  allowed  to  stay  who  were  unable  to  pay  their  rents, 
and  still  a  considerable  proportion  of  the  space  in  the  new  buildings 
remained  vacant.136  Under  these  conditions,  many  of  these  buildings 
did  not  yield  enough  income  to  pay  their  operating  expenses,  fixed 
charges,  and  ground  rent,  and  new  capital  for  erecting  more  sky- 
scrapers was  not  available.137  Instead  of  the  urge  to  erect  new  tall 
buildings,  the  emphasis  was  now  placed  on  the  science  of  successful 
management  of  those  already  erected.138 

G.    SUMMARY  OF  THE  TREND  OF  CHICAGO  LAND 
VALUES,  1877-98 

The  aggregate  value  of  the  land  in  the  211  square  miles  of  the  present 
city  limits  of  Chicago  having  declined  from  $575,000,000  in  the  peak 
reached  before  the  panic  of  1873  to  approximately  $250,000,000  in 
1877,  the  brisk  recovery  beginning  in  1879  had  brought  this  aggregate 
back  to  $485,000,000  by  the  end  of  1882.  A  period  of  equilibrium  then 
followed  in  which  land  values  remained  almost  stationary  until  1886, 
when  they  began  to  rise  slowly,  until  by  the  end  of  1888  this  aggregate 
amounted  to  approximately  $650,000,000.  In  the  extraordinary  boom 
of  1889  and  1890,  in  spite  of  the  failure  of  land  values  to  advance 
in  the  residential  belt  of  the  old  city,  and  only  a  moderate  increase  in 
land  prices  on  the  Northwest  Side,  the  rise  in  values  on  the  South  Side 
and  the  central  business  district  was  so  great  that  the  average  gain  for 
the  entire  city  was  over  100  per  cent  in  less  than  two  years,  bringing  the 

136  Chicago  Tribune,  February  4,  1894. 

id.,  April  15,  1894.  ^  Ibid.,  April  22,  1894. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    185 

aggregate  value  of  the  211  square  miles  in  the  present  city  limits  of 
Chicago  to  $1,500,000,000.  In  the  period  of  dulness  that  began  in  1891 
and  the  drastic  depression  that  ensued  after  the  panic  of  1893,  this 
aggregate  declined  to  only  $1,000,000,000  by  1898,  a  smaller  percentage 
of  decline  than  in  any  previous  depression,  because  land  values  on  the 
North  Side  and  the  central  business  district  were  holding  firm  or  ad- 
vancing during  the  deflation  on  the  South  Side.  The  South  Side,  where 
the  value  of  land  south  of  Twelfth  Street,  east  and  south  of  the  Chicago 
River,  and  the  Illinois-Michigan  Canal  had  in  1890  surpassed  that  of 
the  North  and  West  sides  combined,  was  rapidly  losing  its  lead  to  the 
North  Side  from  1893  to  1897  because  of  the  after- the-Fair  reaction, 
the  beginning  of  the  shift  in  the  fashionable  residence  section  north- 
ward to  the  Lake  Shore  Drive,  and  the  rapid  improvement  of  the  trans- 
it facilities  of  the  North  and  Northwest  sides. 

The  central  business  section. — Average  front-foot  land  values  in  the 
section  bounded  by  the  lake,  the  main  and  south  branches  of  the 
Chicago  River,  and  Van  Buren  Street  increased  from  $1,000  in  1873 
and  $500  in  1877  to  $4,000  in  1891-92.  The  aggregate  land  value  of 
$288,000,000  for  the  72,000  front  feet  in  this  district  obtained  from 
actual  sales  is  corroborated  by  the  report  of  the  Tax  Commission  in 
i896.139  Their  valuations,  made  separately  for  each  parcel  in  the  central 
business  district  except  tax-exempt  property,  when  added  together  with 
an  estimated  value  for  the  exempt  tracts  give  practically  the  same  re- 
sult. Since  there  were  no  appreciable  changes  in  average  land  values 
in  the  central  business  district  from  1892  to  1896,  a  rise  of  700  per  cent 
in  downtown  land  values  from  1877  to  1892  is  clearly  indicated.  This 
remarkable  gain  in  property  that  was  yielding  an  income  all  the  time 
in  most  cases  was  due  to  a  number  of  factors,  most  important  of  which 
were  the  skyscrapers,  permitting  a  more  intensive  use  of  office-building 
sites,  the  increased  volume  of  trade  brought  to  the  downtown  area  by 
the  cable  and  elevated  loops  which  in  turn  greatly  increased  the  rents 
on  the  best  retail  streets,  particularly  State  Street  near  Madison  Street, 
and  a  decline  in  interest  and  capitalization  rates  until  central  business 
property  which  yielded  a  net  return  of  from  10  to  30  per  cent  on  the 
selling  value  of  1872  yielded  only  from  2  to  5  per  cent  on  the  selling 
values  of  1892. 

139  See  Economist,  May  16,  1896,  supplement.  See  Figs.  72  and  74  for  land  values  in  the 
central  business  district  of  Chicago  for  1894-96. 


MAP  OF  CHICAGO 

-SHOWING- 
LAND  VALUES  PER  FRONT  FOOT 
1892 


FRONT  FOOT  VALUES  IN  DOLLARS 

fHH  100  AND  OVER 
50  TO  99 
26  TO  49 
4  TO  25 


BASED  ON  RECORDS  OF  ACTUAL  SALES 


PREPARED  BY  HOMER  HOYT 


ig^l  llil:lle  ::i:::il!:?HiSi 


FIG.  26 


MAP  OF  CHICAGO 

-SHOWING- 
LAND  VALUES-  I  892 

AVERAGE  VALUES  FOR  SQUARE  MILE  AND  960  ACRE  TRACTS  IN  DOLLAR  PER  ACRE 

SOURCE1  ACTUAL  SALES 


400  i  400   i  400^x500    i  2006^000 

'  •  v       '          ' 


QOb^     SOO^     500  j    500  jIOOO;2500  il7500 


v 

'Q.^  1000s  i  1500   i  3730  j  ^500  i 


1000  ;  2000 ';  3000.^  3500  ^&too  ;  io,oooj 


3-??-°J5.9°°j8.-?£~ 

7000  :io,50o[  |5I-';i9joooi301op6;40joob/° 
— -J    ,-";!8,500;  !   ,•'     ;         /  2 


200a-J2500  j  3000  13000  j 1 i pH ^V 

4- -! -•! \ i- f — I  ?  [ -I- -\sssTactr 

U  ^^~^ 


1500  j  2000  i  3000i;  3500  |  4000  15000  j f^T-f i — ^ 


*'  •  I  /   !  5000  •  TSOO^-^OO  ;  5000 

IOOO  ;  I560  ;  2500  !  3000  j  3500  I  3;600 1  •  \\^  ; 


I  •     i       •  SOOO 

|i5oo  ^i»oo  ! 2200 i3  ;  ; 

... A. i 

I200'  ''  2500  ;  3500 


FIG.  27 


i88  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

The  rise  of  land  values  in  the  central  business  district  was  by  no 
means  uniformly  distributed,  however,  and  there  were  eddies  and  cross- 
currents of  value  shifts  as  buyers  now  rushed  to  this  spot  and  now  to 
that.  The  Board  of  Trade  section  near  Jackson  and  LaSalle  streets, 
having  had  its  land  boom  and  building  development  from  1881  to  1885, 
lagged  behind  in  the  later  movement  from  1888  to  1891;  but  Dearborn 
Street,  long  obscure  and  neglected,  had  the  most  remarkable  advance  of 
all  in  1889,  coming  to  the  front  as  one  of  the  chief  office-building 
streets  in  the  city.  Prior  to  1890,  most  of  the  interest  of  the  buyers 
centered  in  the  region  from  Madison  Street  to  Van  Buren  Street  and 
from  State  Street  to  Wells  Street,  where  land  values  for  inside  frontage 
on  most  streets  reached  $7,000  a  front  foot  by  1892 ;  but  the  influence  of 
the  North  Side  and  West  Side  cable  loops  north  of  Madison  Street  and 
the  erection  of  skyscrapers  along  Washington  and  Randolph  streets 
caused  a  swing  back  to  the  north  part  of  the  downtown  area.  Lake 
Street,  however,  was  now  outside  the  zone  of  main  activity,  although 
South  Water  Street  was  in  greater  demand  than  ever  among  the  com- 
mission merchants. 

Land  values  on  State  Street  from  Randolph  to  Adams  Street,  with 
the  pinnacle  at  State  and  Madison  streets,  rose  to  a  new  peak,  higher 
than  was  ever  reached  before  in  any  section  of  the  city.  This  increase 
was  due  mainly  to  the  trebling  of  rents  for  ground-store  locations,  al- 
though the  skyscraper  construction  permitting  the  vertical  expansion 
of  department  stores  and  the  erection  of  office  buildings  over  the  retail 
stores  for  the  use  of  doctors  and  dentists  was  also  an  important  factor. 
The  concentration  of  retail  trade  within  a  limited  area  on  a  single 
street,  brought  about  largely  by  the  convergence  of  new  cable  and 
elevated  lines,  was  responsible  for  an  increase  of  land  values  on  State 
Street  near  Madison  from  slightly  over  $1,000  a  front  foot  in  1877  to 
$11,500  a  front  foot  by  1896;  while  a  corner  of  State  and  Madison 
Street  yielded  practically  as  much  ground  rent  in  a  single  year  in  1896 
as  it  was  sold  for  in  1877,  the  increase  in  front-foot  values  being  from 
$  1,000  to  $18,000  in  that  time. 

In  the  meantime,  land  values  on  Michigan  Avenue  south  of  Monroe 
Street,  which  in  1879  had  dropped  to  $200  a  front  foot,  had,  as  a  result 
of  the  completion  of  the  Auditorium  Hotel  at  Congress  Street  and  the 
building  and  planning  of  other  hotels  to  occupy  half  the  ground  from 
Monroe  to  Congress  streets,  advanced  to  $3,000  and  $5,000  a  front 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    189 

foot  by  1892.  Wabash  Avenue,  also,  while  hopelessly  falling  behind 
State  Street  as  a  retail  shopping  street,  had  become  the  center  of  the 
trade  in  musical  instruments,  and  had  been  benefited  by  the  comple- 
tion of  the  South  Side  elevated  line  so  that  its  land  values  from  Monroe 
to  Jackson  streets  had  risen  from  $400  a  front  foot  in  1879  to  $6,000  a 
front  foot  in  1892. 

Fashionable  residential  areas,  1877-95. — Medium-class  houses,  seven 
thousand  of  which  were  vacant  in  the  West  Side  alone  in  1890,  were  in 
such  poor  demand  in  the  old  sections  of  the  city,  as  a  result  of  the  exo- 
dus to  the  suburbs  and  the  growing  popularity  of  apartments  with  gas, 
steam  heat,  and  janitor  service,  that  middle-class  as  well  as  poor-class 
residential  land  remained  stationary  or  declined  in  this  period. 

Land  in  the  fashionable  residential  sections  in  the  old  city  or  in  the 
suburban  districts,  on  the  other  hand,  advanced  rapidly,  particularly 
in  certain  new  locations.  The  value  of  fashionable  residential  land  did 
not  depend  upon  its  income,  for  mansions  costing  from  $25,000  to 
$200,000  could  not  be  rented  for  enough  to  pay  2  per  cent  income  on 
the  investment;  but  upon  the  number  of  wealthy  men  in  Chicago, 
the  prevailing  social  customs  of  the  time,  which  required  the  rich  to 
maintain  elaborate  homes,  and  the  desire  of  the  social  elite  to  congre- 
gate on  certain  streets  on  which  circulated  fashionable  carriages  and 
along  which  were  arrayed  the  palaces  whose  massive  exteriors  and  pro- 
fuse decorations  proclaimed  the  wealth  and  social  standing  of  their  oc- 
cupants. The  use  of  such  land  as  a  fashionable  consumption  good  could 
change  quickly  with  the  whims  and  caprices  of  fashion.  In  that  event, 
not  only  did  the  land  lose  its  value  for  that  purpose,  but  the  mansions 
themselves  were  abandoned  and  frequently  left  as  derelicts  to  be  looted 
by  vandals. 

Prairie  Avenue  from  Eighteenth  to  Twenty-second  streets  had  been 
the  center  of  Chicago's  social  world  in  the  seventies.  The  land  values 
even  in  that  choice  spot  had  declined  to  as  low  as  $250  a  foot  in  1879, 
but  there  was  a  quick  recovery  to  $700  a  front  foot  in  1882.  Thereafter 
the  advance  was  slow,  although  the  $1,000  a  front  foot  offered  for  the 
corner  of  Twentieth  and  Prairie  Avenue  in  1889  was  the  highest  price 
ever  bid  for  residential  land  in  Chicago  up  to  that  time.  Meanwhile, 
the  Lake  Shore  Drive,  reclaimed  from  a  frog  pond  by  Potter  Palmer, 
constructed  along  the  lake  by  filling  in  the  ground,  and  crowned  by  the 
erection  of  a  $150,000  home  for  the  leader  of  the  "400,"  had  risen  in 


igo  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

value  near  Burton  Place  from  $160  a  front  foot  in  1882  to  $800  a  front 
foot  in  1892.  As  the  old  Prairie  Avenue  neighborhood,  encroached  upon 
by  the  vice  area  at  Twenty-second  and  State  streets,  rapidly  lost  its 
prestige  after  1893, the  new  "Gold  Coast"  of  the  North  Side  rose  into 
prominence,  until  it  became  the  chief  center  of  fashionable  society. 

Michigan  Avenue,  converted  into  a  boulevard  for  fashionable  car- 
riages, had  had,  meanwhile,  a  remarkable  rise  in  its  land  values  south  of 
Twenty-sixth  Street  by  1881,  and  this  rise  slowly  continued  until  by 
1888  the  corner  of  Twenty-ninth  and  Michigan  Avenue  sold  for  $700  a 
front  foot.  The  land  along  Michigan  Avenue  as  far  south  as  Twenty- 
sixth  Street  had  acquired  a  new  value,  because  of  its  use  for  apartment 
hotels  for  the  World's  Fair,  so  that  its  land  values  near  Eighteenth 
Street  rose  from  $225  a  front  foot  in  1879  to  $1,500  a  front  foot  in 
1891. 

The  most  rapid  rises  in  high-grade  residential  property  in  the  period 
from  1885  to  1890,  however,  were  in  the  territory  south  of  Thirty-ninth 
Street.  Drexel  and  Grand  boulevards  from  Thirty-ninth  to  Fifty-first 
streets  were  building  up  rapidly  with  fine  homes  from  1885  to  1895, 
Drexel  Boulevard  lots  from  Forty-seventh  to  Fifty-first  streets  rising 
from  $100  to  $600  a  foot  in  that  interval,  and  Grand  Boulevard  lots 
near  Forty-seventh  Street  rising  from  $75  to  $350  a  foot  from  1879  to 
1893.  The  fashionable  Kenwood  and  Hyde  Park  district  was  also  ex- 
panding rapidly,  with  the  result  that  land  values  on  Woodlawn,  Ellis, 
and  Greenwood  from  Thirty-ninth  to  Fifty-first  streets  rose  from  $25 
and  $50  a  foot  in  the  early  eighties  to  $200  a  foot  by  1891,  while  lots  on 
Kimbark,  Blackstone,  and  Lake  Park  avenues  in  the  same  region  rose 
to  $300  a  foot.  Farther  south,  from  Fifty-first  to  Sixty-third  streets 
on  Harper,  Blackstone,  and  Dorchester  avenues,  the  rapid  growth  of 
apartment  buildings  in  preparation  for  the  World's  Fair  added  to  the 
increase  in  population  that  was  taking  place  as  a  result  of  other  forces 
and  caused  land  values  to  rise  from  $20  and  $50  a  front  foot  to  from 
$200  to  $350  a  front  foot  from  1882  to  1892.  The  building  of  the  South 
Side  elevated  line  had  given  a  great  impetus  to  land  values  along 
Prairie,  Calumet,  Indiana,  and  Wabash  avenues  from  Thirty-ninth  to 
Sixty-third  streets,  and  their  land  values  had  risen  from  $10  to  $20  a 
front  foot  in  1879  to  $125  to  $150  a  front  foot  by  1891.  Englewood, 
also,  had  its  fashionable  residence  district  on  Yale,  Harvard,  and  Nor- 
mal avenues,  where  land  values  had  increased  from  $25  to  $150  a  front 
foot  from  1880  to  1890. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    191 

On  the  West  Side  the  conversion  of  Washington  Street  into  a 
boulevard  from  Ashland  Avenue  to  Garfield  Park  had  doubled  the 
value  of  its  frontage  in  the  late  eighties,  until  its  lots  sold  for  from 
$250  to  $300  a  front  foot  by  1892. 

Outlying  business  centers. — The  effect  of  new  transportation  lines  on 
cross- town  streets  intersecting  transit  lines  running  to  the  central  busi- 
ness district  had  given  relatively  high  value  to  transfer  corners  that 
were  becoming  neighborhood  shopping  centers  from  1880  to  1890.  The 
corner  of  Thirty-first  and  Indiana  Avenue  was  leased  on  a  $2,ooo-a- 
front-foot  valuation  in  1892,  the  highest  value  paid  up  to  that  time 
outside  the  central  business  district.  The  corner  of  Thirty-ninth  and 
Cottage  Grove  Avenue,  where  the  Cottage  Grove  horse-car  line,  the 
Thirty-ninth  Street  horse-car  line,  and  the  Hyde  Park  dummy  lines 
had  their  terminal  transfer  points  in  1875,  grew  into  the  most  important 
neighborhood  shopping  center  for  a  wide  range  of  territory,  its  land 
value  increasing  from  $220  a  front  foot  in  1881  to  $1,500  a  front  foot 
in  1889.  The  State  Street  and  Cottage  Grove  Avenue  cable  lines,  com- 
pleted to  Thirty-ninth  Street  in  1882  and  to  Sixty-third  Street  in  1887, 
had  greatly  enhanced  land  values  along  both  those  streets,  the  average 
front-foot  values  of  State  Street  from  Fifty-first  to  Sixty-third  streets 
increasing  from  $15  to  $i 60  from  1879  to  1892,  and  of  Cottage  Grove 
Avenue  between  the  same  streets  for  the  same  interval  from  $10  to 
$250  a  front  foot.  The  importance  of  Twenty-second,  Thirty-first, 
Thirty-fifth,  and  Thirty-ninth  streets  as  cross- town  streets  connecting 
with  the  downtown  lines  on  State  Street  and  Cottage  Grove  Avenue, 
crossing  the  main  boulevards  on  the  South  Side,  and  leading  to  the 
Illinois  Central  Railroad  stations,  led  to  the  speculative  activity  on 
Forty- third  Street  in  1891,  where  land  values  ranged  from  $200  to 
$300  a  front  foot. 

Meanwhile,  Sixty- third  Street  from  the  Illinois  Central  Station  to 
Cottage  Grove  Avenue,  which  had  been  an  unimproved  country  road  in 
1880,  had  begun  to  expand  near  that  station  as  a  result  of  the  suburban 
railroad  service  in  the  early  eighties.  Its  straggling  shops  had  received 
a  great  accession  of  business  when  the  cable  line  was  completed  on 
Cottage  Grove  Avenue  to  Sixty- third  Street  in  1887  and  a  horse-car 
line  constructed  east  on  Sixty-third  Street  in  1888.  The  coming  of  the 
World's  Fair  to  Jackson  Park  and  the  completion  of  the  South  Side 
elevated  line  down  Sixty- third  Street  in  1893  capped  the  climax.  Land 
values  of  Sixty-third  Street  in  this  section  rose  from  $20  to  $30  a  front 


192  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

foot  in  1883  to  $250  and  $300  a  front  foot  in  1891,  with  the  corner  off 
Sixty- third  and  Cottage  Grove  selling  for  $400  a  front  foot. 

In  Englewood  the  business  center  had  been  shifting  from  Wentworth 
Avenue  from  Fifty-ninth  to  Sixty-third  streets  to  Sixty-third  Street  west 
of  Wentworth  Avenue,  and  the  growth  of  this  community  had  been  so 
great  from  1880  to  1890  that  the  best  locations  along  Sixty- third  Street 
in  Englewood  were  valued  at  over  $400  a  front  foot  in  1891.  In  South 
Chicago,  Ninety-second  and  Commercial  Avenue  had  become  the  main 
business  center  of  that  community  during  1890  with  inside  lots  on 
Ninety-second  near  the  corner  of  Commercial  valued  at  $600  a  front 
foot  in  1891 .14°  At  the  old  center  of  the  village  of  Hyde  Park,  Fifty-third 
and  Lake  Park  Avenue,  land  values  had  reached  $i,doo  a  front  foot  in 
1891,  while  during  the  boom  on  Cottage  Grove  Avenue  near  Washington 
Park  in  the  latter  part  of  1890  the  northeast  corner  of  Fifty-first  and 
Cottage  Grove  Avenue  that  had  sold  for  $60  a  front  foot  in  1879  brought 
$750  a  front  foot. 

On  the  West  Side,  Madison  Street  west  of  Crawford  Avenue  was 
particularly  benefited  by  the  cable  line  on  Madison  Street  to  the  central 
business  district,  completed  in  1890,  and  the  new  Cicero  and  Proviso 
electric  line,  built  to  Harlem  Avenue  along  Madison  Street  in  1891. 
On  the  North  Side,  the  corner  of  North  and  California  had  developed 
as  a  business  center  by  1895.  Cable  lines  on  Milwaukee  Avenue,  Clark 
Street,  and  Blue  Island  Avenue  also  aided  business  volume  at  the  outer 
limits  of  development  on  these  streets. 

Notwithstanding  the  growth  of  outlying  business  centers  at  a  con- 
siderable distance  from  the  main  business  center  during  this  period,  the 
effect  of  swift  transportation,  afforded  first  by  the  cable  lines,  then  by 
the  elevated  railroads  and  the  electric  surface  lines,  was  to  cause 
shoppers  to  pass  by  the  stores  in  the  old  sections  on  Cottage  Grove 
Avenue  north  of  Thirty-ninth  Street,  Madison  Street,  Milwaukee 
Avenue,  Blue  Island,  and  Clark  Street,  and  to  come  directly  to  the 
downtown  area  where  the  conveniences  and  bargains  offered  by  the  big 
State  Street  department  stores  held  a  magnetic  attraction  for  them. 
Consequently,  the  speculative  possibilities  of  the  development  of  outly- 
ing business  centers  just  beyond  the  settled  area  did  not  attract  much 
attention  at  this  time,  and  corners  that  a  few  decades  later  commanded 
values  almost  as  high  as  downtown  land  were  sold  at  very  low  prices 
even  during  the  boom  of  1890. 

T*»  Economist,  May  16,  1891. 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    193 

Rise  in  the  value  of  acre  tracts,  1879-92. — The  rise  in  the  value  of 
South  Side  acre  tracts,  that  in  many  cases  exceeded  1,000  per  cent  in 
ten  years,  was  one  of  the  most  marked  features  of  the  real  estate  market 
from  1888  to  1890,  as  has  already  been  noted.  The  extent  and  character 
of  that  movement  can  be  best  illustrated  by  a  few  representative  sales. 
Thus  land  at  Forty-eighth  and  Grand  Avenue  sold  for  $4,000  an  acre  in 
1 88 1  brought  $32,500  an  acre  in  1892.  The  old  Washington  Park  race 
track  at  Sixty- third  and  Cottage  Grove  Avenue,  bought  for  $2,000  an 
acre  in  1883,  was  valued  at  $20,000  an  acre  in  1893.  Land  south  of 
Jackson  Park  advanced  from  $1,000  to  $15,000  an  acre  from  1879  to 
1893.  Acre  tracts  at  Eighty-seventh  and  Stony  Island  Avenue  that  were 
worth  $500  an  acre  in  1881  sold  for  $5,600  an  acre  in  1891.  The  ground 
from  Seventy-fourth  to  Seventy-fifth,  State  to  Stewart  Avenue  in  Engle- 
wood,  that  sold  for  $1,000  an  acre  in  1886  brought  $15,880  an  acre  in 
1891.  The  corner  of  Sixtieth  and  State  advanced  in  value  from  $1,000 
an  acre  in  1883  to  $24,000  an  acre  in  1891.  Land  at  Fifty-fifth  and 
Ashland  Avenue  rose  from  $500  to  $4,500  an  acre  from  1880  to  1891, 
and  at  at  Eighty-seventh  and  Ashland  Avenue  there  was  a  tract  which 
sold  for  $90  an  acre  in  1880  which  had  sold  for  $1,800  an  acre  in  1890. 
The  influence  of  Stickney  tract  speculation  sent  up  the  values  of  acres 
at  Seventy-first  and  Western  Avenue  from  $600  to  $3,000  an  acre  from 
1888  to  1890,  and  at  Sixty- third  and  Crawford  Avenue  from  $600  to 
$2,500  an  acre  from  1888  to  1891.  Thus  an  extremely  rapid  advance  in 
land  values  in  this  decade  occurred  throughout  the  entire  South  and 
Southwest  sides  of  Chicago. 

The  advance  in  the  value  of  acre  tracts  at  the  west  city  limits  was 
also  noteworthy,  although  not  so  extreme  as  on  the  South  Side.  Land 
at  the  corner  of  Madison  and  Oak  Park  avenues  rose  in  value  from  $400 
an  acre  in  1881  to  $3,000  an  acre  in  1890,  and  the  tract  at  Twelfth  and 
Cicero  Avenue  from  $800  to  $3,000  an  acre  in  the  same  period. 

Along  the  North  Shore  at  Lawrence  Avenue  and  in  Rogers  Park, 
there  was  a  rise  in  land  values  to  $5,000  and  $7,500  an  acre  in  this  peri- 
od, and  land  near  North  and  California  avenues  at  Humboldt  Park  was 
also  showing  a  marked  increase  in  value,  but  the  gain  in  prices  on  most 
of  the  Northwest  Side  was  very  moderate  before  1890.  Acre  tracts  along 
Crawford  from  North  to  Fullerton  avenues  gained  in  value  from  $800  to 
$3,000  an  acre  from  1882  to  1890,  but  much  land  within  the  northwest- 
ern part  of  the  city  could  still  be  bought  for  $500  an  acre  in  1895.  In  no 
cases  were  there  advances  comparable  to  the  ten-year  increases  of  1,000 


MAP  OF  CHICAGO 

-SHOWING- 
LAND  VALUES  - 1890  TO  1892 
INDICATED  BY  SALES  OF  ACRE  TRACTS 


LOCATION  AND  EXTENT  OF  AREAS  SOLO. 
THE  PRICE  IN  DOLLARS  PER  ACRE  IS 
INDICATED  BY  THE  FIGURE  IN  THE  SAME 

SQUARE  MILE  SECTION 


FIG.  28 


THE  FIRST  SKYSCRAPERS  AND  THE  WORLD'S  FAIR    195 

and  2,000  per  cent  shown  in  many  instances  by  sales  on  the  South 
Side. 

Thus  the  rise  in  land  values  that  culminated  in  1890  or  shortly  after- 
ward was  distributed  throughout  the  Chicago  area  in  a  widely  varying 
manner.  In  fact,  in  some  sections  of  the  near  West  Side  there  was  an 
actual  decline  in  land  values  during  this  period,  and  in  most  of  the 
cheap  residential  sections  of  the  old  city  there  was  little  if  any  rise  in 
ground  values.  Even  in  the  downtown  area,  the  rise  in  land  values  on 
Lake  Street  was  very  slight.  The  land  values  of  close-in  secondary  busi- 
ness streets,  such  as  West  Madison,  Clark  Street,  Halsted  Street,  Blue 
Island  Avenue,  Milwaukee  Avenue,  Twenty-second  Street,  and  Cottage 
Grove  Avenue  north  of  Thirty-first  Street,  affected  adversely  by  com- 
petition of  downtown  stores,  remained  stationary  or  had  only  slight 
gains.  Acre  tracts  on  the  Northwest  Side  that  were  not  over  six  or 
eight  miles  from  the  city  hall  had  been  affected  little  by  the  boom  that 
raged  elsewhere.  Notwithstanding  the  dead  weight  of  these  inert  sec- 
tions, there  were  enough  centers  of  speculative  excitement  in  and 
around  Chicago  to  absorb  funds  from  a  considerable  part  of  the  people 
of  Chicago  and  to  create  a  furor  of  real  estate  activity  that  pervaded  the 
entire  community.  Gains  of  700  to  1,000  per  cent  in  land  values  in  ten 
years  on  the  South  Side  and  in  the  central  business  district  were  the 
main  factors  in  the  total  aggregate  advance  for  the  city  as  a  whole. 

The  rapid  population  growth  of  the  outlying  territories. — The  rapid  rise 
in  land  values  in  the  decade  from  1880  to  1890  in  the  territory  just  be- 
yond the  old  city  limits  of  1888  was  accompanied,  and  to  a  large  extent 
caused,  by  an  extraordinary  population  growth  of  the  new  areas  an- 
nexed to  the  city  in  this  same  decade.  Thus  the  population  of  the  town- 
ship of  Lake  increased  from  18,380  to  100,223  from  1880  to  1890,  or  a 
gain  of  550  per  cent;  the  number  of  people  in  Lake  View  rose  from  6,505 
to  52,273,  or  a  gain  of  800  per  cent;  and  the  population  of  Hyde  Park 
increased  from  15,716  to  133,496,  or  a  gain  of  850  per  cent,  in  the  same 
decade.  While  the  population  in  the  old  city  limits  increased  from  503,- 
145  to  792,377,  or  57  per  cent  in  the  decade,  the  population  of  the  main 
portion  of  the  annexed  territory  advanced  from  40,601  to  308,123,  a 
gain  of  650  per  cent.141  The  demand  for  vacant  land  on  the  fringe  of 
settlement  for  the  actual  use  of  this  rapidly  growing  population  had 
caused  the  first  steady  rise  in  land  values  which  developed  into  a  wild 
speculative  boom  in  1889  and  1890. 

**  Ibid.,  July  19,  1890;  U.S.  Census  for  1890. 


CHAPTER  V 

THE  LAND  BOOM  OF  A  NEW  ERA  THAT  FOLLOWED 
A  WORLD  WAR,  1898-1933 

A.    SURVEY  OF  THE  CAUSES  OF  THE  GROWTH  OF  CHICAGO, 
1830-90  AND  1890-1933 

Chicago's  growth  from  the  hamlet  of  a  dozen  log  cabins  in  the 
swamps  around  Fort  Dearborn  in  1830  to  the  metropolis  with  over  a 
million  population  at  the  time  of  the  opening  of  the  World's  Columbian 
Exposition  in  1893  was  attained  by  the  constant  accession  of  new  func- 
tions and  new  sources  of  power  which  reinforced  the  earlier  forces 
before  they  began  to  wane.  The  inherent  advantages  of  its  situation 
were  but  dimly  realized  when  it  was  a  military  and  fur  trading  post 
prior  to  1833  because  its  hinterland  was  then  almost  uninhabited.  As 
the  migration  to  the  Northwest  gained  in  volume,  with  the  increase  in 
the  population  of  Illinois  from  157,445  in  1830  to  851,470  in  1850,  and 
a  gain  in  the  population  of  all  the  North  Central  states1  from  1,610,473 
to  5,403,595  in  the  same  interval,  the  young  city  by  the  lake  became  the 
retail  center  of  trade  carried  on  by  wagon  caravans  that  had  a  radius  of 
two  hundred  miles.  From  1841  to  1848  Chicago  developed  a  rapidly 
expanding  commerce  that  was  based  on  the  imports  of  timber  from  the 
white-pine  forests  of  Michigan,  which  were  easily  accessible  to  lake  ves- 
sels, and  the  exports  of  grain  brought  in  over  dirt  roads  by  horse-drawn 
vehicles.  The  completion  of  the  canal  in  1848  facilitated  the  shipments 
of  grain  and  lumber,  and  the  coming  of  the  railroads  from  the  East  in 
1852  and  their  extension  westward  to  the  Mississippi  River  and  beyond 
extended  Chicago's  trading  area  enormously.  While  the  population 
of  the  East  North  Central  states  was  increasing  from  4,523,260  in 
1850  to  9,124,517  in  1870  and  the  population  of  the  West  North  Central 
states  was  rising  from  880,335  to  3,856,594,  the  railroads  from  Chicago 
were  penetrating  this  rapidly  filling  area  and  developing  for  Chicago 

1  Ohio,  Indiana,  Illinois,  Michigan,  Wisconsin,  Minnesota,  Iowa,  Missouri,  North 
Dakota,  South  Dakota,  Nebraska,  and  Kansas  are  the  states  in  the  North  Central  group. 
The  first  five  of  these  states  are  listed  in  the  East  North  Central  group  and  the  last  seven  in 
the  West  North  Central  classification. 

196 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          197 

merchants  a  great  wholesale  trade.  For  the  spreading  of  the  railroad 
net  disclosed  the  fact  that  Chicago  was  the  main  transportation  gate- 
way between  the  East  and  the  West,  for  it  was  located  on  the  southern 
tip  of  Lake  Michigan  on  a  direct  line  with  New  York  City  and  the 
Mohawk  Pass  which  provided  the  only  break  in  the  Appalachian 
Mountain  chain.  The  settlement  of  the  Middle  West  led  to  the  dis- 
covery that  it  was  one  of  the  richest  agricultural  valleys  in  the  world, 
for  the  soil  was  fertile  and  the  rainfall  sufficient  to  insure  maximum 
crops.  Within  a  radius  of  six  hundred  miles  from  Chicago  is  the  area 
that  contains  most  of  the  improved  land  in  crops  in  the  United  States, 
for  the  soil  to  the  south  and  east  of  this  belt  is  poorer  and  the  rainfall  to 
the  west  of  it  is  far  less  abundant.2 

From  1870  to  1890  the  mileage  of  Chicago's  railroads  continued  to 
increase,  and  the  population  of  the  East  North  Central  states  rose  from 
9,124,517  to  13,478,305  and  that  of  the  West  North  Central  states  from 
3,856,594  to  8,932,112.  To  its  position  as  a  trading  center  for  forest  and 
farm  products  Chicago  now  added  the  manufacturing  and  industrial 
functions.  Situated  in  the  midst  of  agricultural  resources  of  unsur^ 
passed  fertility  that  enabled  bountiful  crops  of  wheat  and  corn  to  be 
produced  and  that  supported  great  numbers  of  hogs  and  cattle,  it  was 
in  a  natural  position  to  supply  this  prairie  world  with  manufactured 
products.  In  addition  to  all  of  these  advantages,  it  occupied  a  location 
that  was  of  paramount  importance  with  respect  to  coal  and  iron — the 
basic  materials  for  modern  industrial  growth.  Chicago  at  the  southern 
tip  of  Lake  Michigan  is  close  to  the  Illinois  coal  fields.  In  Minnesota, 
on  the  Mesabi  Range,  are  iron-ore  reserves  hundreds  of  feet  thick  which 
run  as  high  as  65  per  cent  iron  and  which  can  be  worked  from  the  sur- 
face with  steam  shovels.  These  iron  deposits,  the  richest  and  most 
abundant  in  the  United  States,  are  within  easy  access  of  Lake  Superior. 
Since  it  long  required  above  two  tons  of  coal  to  smelt  one  ton  of  iron, 
iron  tended  to  be  transported  to  coal  rather  than  the  reverse.  The 
Great  Lakes  furnished  a  water  highway  on  which  specialized  ore  steam- 
ers carried  the  iron  ore  at  the  lowest  ton-mile  cost  in  the  world,  and 
Chicago  was  a  natural  meeting  place  of  Minnesota  iron  and  Illinois 
coal.  The  opening  of  the  Minnesota  iron  mines  in  1884  gave  a  further 

2  Maps  of  improved  land  in  crops,  and  value  of  all  farm  crops  (U.S.  Census  [1910, 
1920]).  Also  see  J.  Paul  Goode,  The  Geographic  Background  of  Chicago  (1926),  for  a  discus- 
sion of  all  of  these  factors. 


198  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

tremendous  impetus  to  the  growth  of  Chicago  and  to  the  further  devel- 
opment of  its  trades  and  manufactures. 

The  growth  of  Chicago,  however,  did  not  stop  in  1890,  for  from 
1890  to  1930  its  population  tripled.  Although  the  forces  responsible  for 
the  early  growth  had  begun  to  wane,  as  the  lumber  trade  declined  with 
the  exhaustion  of  the  pine  forests  of  Michigan  and  as  primary  grain 
shipments  fell  off  when  grain  was  diverted  to  northern  lake  or  southern 
gulf  ports,  some  of  the  old  forces  continued  with  undiminished  vigor 
and  new  factors  appeared  to  reinforce  the  original  ones. 

As  the  pig-iron  production  of  the  United  States  increased  eightfold 
from  1885  to  1916,  and  as  its  coal  production  increased  twelvefold  in 
the  same  interval  and  the  young  republic  became  the  largest  industrial 
nation  in  the  world,  Chicago  gained  a  more  than  proportionate  share  in 
this  expansion.  For  the  center  of  population  continued  to  move  west- 
ward until  in  1920  it  was  in  Indiana  almost  due  south  of  Chicago,  as  the 
population  of  the  East  North  Central  states  increased  from  13,478,305 
to  25,297,185  between  1890  and  1930.  The  basic  steel  industries  in  the 
Chicago  region  grew  and  expanded  as  East  Chicago  and  Gary  were 
developed  at  the  tip  of  the  lake.  Oil  refineries  rose  in  Whiting  as  trunk 
pipe  lines  were  constructed  from  the  producing  fields  in  Kansas  and 
Oklahoma  to  Chicago. 

Even  the  remarkable  expansion  of  such  basic  industries  were  not 
enough  to  sustain  the  upward  curve  of  Chicago  land  values  and  popula- 
tion in  the  last  four  decades.  Power  resources  were  multiplied,  the  mo- 
bility of  the  population  greatly  increased,  and  the  banking  strength 
enhanced  by  a  series  of  inventions  and  financial  devices  which  came  to 
full  fruition  in  this  period.  The  steam  power,  which,  applied  to  lake 
and  river  vessels,  had  brought  the  tide  of  population  from  all  parts  of  the 
United  States  and  Europe  to  Chicago,  and  which,  applied  to  the 
wheels  of  factories,  had  enabled  this  population  to  be  supported,  was 
supplemented  by  electric  and  auto-motive  power.  Chicago  became  the 
center  of  a  great  power  pool  or  a  generating  point  of  electricity  from 
which  energy  was  transmitted  over  high-tension  wires  to  hundreds  of 
small  communities.  It  became  a  part  of  a  national  telephone  network 
and  the  principal  manufacturing  center  of  telephone  equipment,  as 
the  telephone  ceased  to  be  regarded  as  a  toy  or  a  luxury  and  came  into 
general  use  in  the  United  States.  With  the  advent  of  the  mail-order 
house,  the  city  soon  assumed  the  position  of  dominance  as  a  distribut- 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          199 

ing  center  for  Sears,  Roebuck  and  Company  and  Montgomery  Ward 
and  Company,  for  it  was  located  close  to  the  population  center  of  the 
United  States.  With  the  growth  of  the  automobile  industry  from  its 
humble  start  in  1900  to  its  overshadowing  position  by  1929,  Chicago 
failed  to  become  an  important  manufacturing  center,  but  the  260,000 
private  garages  in  Cook  County,  the  thousands  of  filling  stations,  pub- 
lic garages,  and  automobile  showrooms  that  sprang  up  within  the  city 
attested  to  the  importance  of  the  automobile  in  altering  the  city's 
physical  structure.  The  paving  of  most  of  the  alleys  in  the  city  after 
1910,  the  building  of  hundreds  of  miles  of  concrete  highways  in  the  city's 
environs,  the  widening  of  a  number  of  the  principal  streets,  and  the 
erection  of  many  new  bridges  over  the  Chicago  River  and  its  branches 
were  likewise  the  result  of  the  omnipresent  automobile.  The  radio, 
which  rose  from  nothing  to  almost  the  saturation  point  of  possible 
demand  with  a  set  in  nearly  every  home,  gave  rise  to  radio-manufac- 
turing industries  within  Chicago  and  to  a  multiplication  of  retail  out- 
lets. The  airplane  furnished  a  demand  for  large  landing  fields  on  the 
outskirts  of  the  city,  and  gave  the  maximum  possibility  of  speed  in  the 
movement  of  people. 

With  the  increased  speed  of  transportation  and  communication,  there 
was  a  surge  of  population  outward  from  the  center  of  the  city  to  vacant 
prairie  tracts  where  new  homes  with  all  modern  improvements  could 
be  built.  As  a  result  there  was  a  great  increase  in  the  demand  for 
plumbing  supplies  and  bathroom  fixtures,  as  well  as  for  new  furniture 
that  was  in  keeping  with  the  new  surroundings.  Manufacturing  plants- 
and  retail  stores  were  kept  busy  in  supplying  this  demand. 

Still  all  this  was  not  enough  to  keep  up  the  constant  expansion  of 
the  numbers  of  the  people  who  could  find  employment  in  Chicago  and 
to  sustain  the  rising  curve  of  land  values.  The  banking  and  financial; 
power  of  Chicago  must  likewise  be  expanded.  The  great  Loop  banks 
gained  primacy  in  the  Middle  West,  as  they  came  to  hold  the  deposits 
of  seven  thousand  correspondent  banks  in  smaller  cities  and  country 
towns.  In  addition,  there  was  a  remarkable  growth  of  banks  in  the 
outlying  neighborhoods  of  Chicago,  which  attracted  the  savings  of  their 
own  communities  and  reinvested  them  in  local  enterprises.  Finally,  in 
that  grand  multiplication  of  debt  which  occurred  in  the  United  States 
from  1914  to  1931,  in  which  long-term  obligations  increased  from  $38,- 
000,000,000  to  $134,000,000,000,  there  was  a  vast  outpouring  of  ac- 


20O 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


cumulated  savings  upon  real  estate  bonds  in  Chicago  and  upon  the 
grandiose  financial  empire  of  Insull. 

As  Table  IX  shows,  the  growth  of  Chicago's  population  was  not 
sustained  in  the  last  few  decades  so  much  by  increased  opportunities 
for  employment  in  manufacturing  as  it  was  by  the  various  types  of 
services  that  were  rendered  in  non-material  form.  The  increase  in  the 
number  of  salesmen,  school-teachers,  beauty-parlor  operators,  adver- 
tising men,  and  clerks  became  a  striking  feature  of  the  generation  of  this 

TABLE  IX* 

NUMBER  OF  PERSONS  OVER  TEN  YEARS  OF  AGE  IN  GAINFUL 
OCCUPATIONS  IN  CHICAGO,  1910-30 


OCCUPATION 

AGGREGATE  NUMBERS 

INDEX  NUMBERS  1910=  100 

IQIO 

1920 

1930 

1910 

1920 

1930 

Manufacturing  and  me- 
chanical      

421,740 
98  ,  649 
163,124 
15,960 
51,899 

H9,374 
120,247 

489,001 
110,521 
206,975 
23,110 
71,191 
116,102 
2io,537 

563,750 
143,553 
264,817 
28,329 
"5,970 
I9I,57o 
255,495 

100 
100 
IOO 
IOO 
IOO 
IOO 
IOO 

166 

112 
125 
145 
137 
98 

175 

133 
145 
163 
177 
223 

165 
213 

Transportation  
Trade  

Public  service  

Professional  

Domestic  and  personal. 
Clerical 

Total            

996,589 

1,231,434 

1,658,858 

IOO 

124 

166 

*  "Occupational  Statistics,  Illinois,"  Fifteenth  Census  of  U.S.  (1930),  Table  III,  p.  6. 

new  era  which  sought  to  avoid  physical  exertion,  to  get  rich  by  specula- 
tion, to  create  values  by  advertising,  to  appear  beautiful,  well  groomed, 
and  youthful  at  all  costs,  and  to  rise  to  positions  of  power  and  dominance 
through  the  magic  potency  of  a  formal  education  ending  with  a  college 
degree.  Thus  the  employees  in  manufacturing  increased  33  per  cent 
from  1910  to  1930,  while  employees  in  all  other  lines  increased  90  per 
cent  in  the  same  interval. 

B.   THE  PERIOD  FROM  1898  TO  1918 

Chicago  in  1900. — The  Chicago  of  1900  presented  a  picture  that  may 
be  contrasted  with  the  appearance  of  the  city  in  1873  and  in  1933.  In 
the  central  business  district,  the  elevated  loop  had  just  been  completed. 
Above  the  skyline  of  the  five-  and  six-story  buildings  erected  after  the 
fire  of  October  9,  1871,  rose  the  first  crop  of  skyscrapers — the  twenty 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          201 

buildings  from  twelve  to  nineteen  stories  high  that  were  the  marvel  of 
the  nineties.  State  Street  department  stores  were  just  attaining  their 
first  exuberant  expansion,  and  as  the  elevated  lines  brought  people 
downtown,  these  multiple  stores  were  bitterly  attacked  by  the  small 
local  merchants,  even  as  the  chain  stores  are  today.  The  banks  and 
theaters  were  practically  all  concentrated  in  the  central  business  area, 
so  that  the  Chicago  "Loop"  had  become  the  place  where  the  people 
in  the  Metropolitan  Area  congregated  for  the  purpose  of  making  most 
retail  purchases,  except  foodstuffs,  for  transacting  financial  business 
and  for  entertainment.  For  this  reason,  land  values  in  the  central  busi- 
ness district  had  advanced  greatly  even  from  the  boom  prices  of  1873, 
and  the  gain  had  been  maintained  even  during  the  depression  following 
the  panic  of  1893. 

The  belt  of  land  extending  for  three  miles  from  the  Loop  on  the 
South,  West,  and  North  sides,  which  was  an  area  of  new  and  vigorous 
growth  in  1873  and  an  obsolete  and  blighted  area  in  1933,  contained  a 
strange  conglomeration  of  social  and  economic  forces  in  1900.  A  consid- , 
erable  proportion  of  all  the  factories  and  industries  in  the  city  still 
hugged  the  banks  of  the  Chicago  River  and  its  branches  on  the  nean 
West,  North,  and  South  sides.  Close  to  the  workshops  of  the  West 
Side  in  the  i  square  mile  from  Twelfth  to  Twenty-second  streets  and 
from  Halsted  to  Ashland  avenues  were  packed  73,400  people,  or  twice 
as  many  as  lived  in  88  square  miles  inside  the  outer  edges  of  the  city  lim- 
its. The  influx  of  a  steady  stream  of  Italians,  Poles,  and  Russian  Jews  into 
the  old  residential  areas  of  the  city  kept  up  a  demand  for  this  cheaper 
type  of  property.  The  older  Irish  and  German  elements  sold  out  to  new 
immigrants  and  used  the  proceeds  to  buy  homes  along  the  new  ele- 
vated or  electric  lines.  Industries  were  also  beginning  to  expand  into 
the  old  residential  sections,  so  that  owners  of  such  property  felt  that 
there  was  a  prospective  demand  from  this  source  also.  The  colored 
race,  confined  within  the  narrow  limits  of  a  belt  from  Twenty-sixth  to 
Thirty-ninth  streets,  from  State  to  LaSalle  streets,  also  paid  high  rents 
for  the  shacks  within  those  boundaries.  Likewise,  the  Chinese  segre- 
gated on  South  Clark  Street,  and  the  Jews,  hemmed  in  by  the  invisible 
wall  of  their  West  Side  ghetto,  paid  high  rents  for  obsolete  buildings 
because  of  the  social  barriers  against  their  movements.  The  wide-open 
"red  light"  district,  with  its  two  hundred  and  sixty  houses  of  prostitu- 
tion on  State  and  Dearborn  streets  from  Eighteen  to  Twenty-second 


202  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

street,  also  paid  high  returns  to  the  owners  for  their  immoral  use. 
A  more  intensive  use  of  land  for  apartment  buildings  along  business 
streets  and  in  close  proximity  to  fashionable  residential  areas  also  had 
supported  land  values  in  these  sections  to  some  extent.  Where  other 
opportunities  did  not  present  themselves,  the  once  fashionable  resi- 
dences on  the  near  North  and  South  sides  were  converted  into  boarding- 
houses. 

Thus  land  in  what  is  now  known  as  the  blighted  area  yielded  an  in- 
come and  had  prospects  of  enhancement  in  value  due  to  absorption  by 
industry  that  it  does  not  have  in  1933.  Even  in  1900,  however,  the  re- 
turns from  this  class  of  property  were  capitalized  at  a  high  rate,  so 
that  the  land  values  as  a  whole  had  ceased  to  advance.  Moreover,  the 
close  proximity  of  the  vice  section,  the  colored  belt,  and  of  the  advancing 
line  of  industries  and  warehouses  to  the  fashionable  residential  section 
on  Prairie  Avenue  had  already  started  its  decline.  Similarly,  Ashland 
Avenue,  Jackson  Boulevard  on  the  West  Side,  and  Dearborn  and  La- 
Salle  streets  on  the  North  Side  were  sliding  downward  and  losing  their 
social  prestige. 

The  intrusion  of  the  races  of  the  new  immigration,  of  factories  and 
warehouses,  and  of  vice  elements  was  thus  pushing  the  older  immi- 
grants and  the  higher-income  classes  into  a  zone  of  new  growth.  The 
new  areas  being  built  upon  in  1900  were  chiefly  located  along  the  new 
elevated  lines,  such  as  at  the  terminus  of  the  Northwestern  elevated 
line  at  Wilson  Avenue,  southeast  of  Sixty-third  and  Cottage  Grove 
Avenue,  along  the  Metropolitan  elevated  line  from  Cicero  to  Crawford 
avenues  and  from  Madison  to  Harrison  streets.  It  was  the  era  when  the 
two- apartment  building  was  gaining  rapid  popularity  and  when  rows 
and  rows  of  such  structures  were  being  erected.  Other  areas  of  rapid 
growth  at  the  beginning  of  this  century  were  the  Kenwood  district; 
Englewood;  Milwaukee  Avenue  from  Chicago  to  North  Avenue, 
where  a  colony  of  Poles  was  expanding  rapidly;  and  the  district  east  of 
Humboldt  Park,  which  was  being  settled  by  Germans. 

Beyond  this  ring  of  new  growth  that  was  being  added  to  the  solid 
nucleus  of  the  old  city  were  detached  settlements  that  varied  in  size 
from  hamlets  to  cities  of  fifty  thousand  population.  The  largest  of  these 
planetary  urban  bodies  was  South  Chicago,  which  had  become  a  great 
iron  and  steel  center  as  the  commerce  on  the  Calumet  River  was  about 
to  surpass  the  waning  traffic  on  the  Chicago  River.  Other  industrial 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR         203 

towns  inside  the  city  limits  of  Chicago,  but  separated  by  tracts  of 
prairie  from  the  main  body,  were  Hegewisch,  Pullman,  Kensington, 
and  Riverdale  on  the  South  Side.  South  westward  was  the  pleasant 
suburb  of  Morgan  Park.  Beyond  the  city  limits  to  the  north  and  west 
communities  were  being  settled  by  the  office  workers  in  Chicago.  These 
included  Oak  Park  and  LaGrange  to  the  west  and  Evanston,  Wilmette, 
Winnetka,  and  Lake  Forest  along  the  North  Shore.  These  outlying 
settlements  within  and  without  the  city  limits  of  Chicago  ran  the  entire 
gamut  of  the  social  scale  from  the  squalid  quarters  in  South  Chicago, 
where  fifty- thousand  inhabitants  were  "hemmed  in  by  stretches  of  rail- 
road tracks  and  ugly  buildings"  and  " where  scores  of  towering  smoke 
stacks  and  furnaces  pour  out  smoke  and  dust  day  and  night,"  to  the 
spacious  estates  of  the  millionaires  of  Lake  Forest.3 

As  Figure  29  shows,  beyond  the  main  body  of  the  settled  area  of 
Chicago  and  between  the  detached  settlements  there  were  thus  wide 
stretches  of  vacant  land  within  the  city  limits  of  Chicago  on  both  the 
North  and  the  South  sides.  The  Northwest  Side,  west  of  Western  Ave- 
nue and  north  of  North  Avenue,  was  mostly  vacant,  except  for  the  2 
square  miles  from  Western  to  Kedzie  and  from  Belmont  to  North 
avenues.  In  the  area  thus  defined,  excluding  these  2  square  miles,  there 
were  32  square  miles,  and  in  it  there  lived  only  39,131  people  in  1900. 
Even  though  the  population  of  this  area  had  increased  from  3,000  in 
1880  and  10,734  in  1890  to  this  number,  not  more  than  one-fourth  of 
this  territory  had  buildings  on  it  and  one-third  of  it  was  farm  land  that 
had  never  been  subdivided.  There  were  parts  of  it  that  were  2  or  3 
miles  from  a  street-car  line  or  a  paved  street.  Less  than  6  per  cent  of 
the  streets  was  paved  and  no  alleys  had  been  improved.  The  population 
was  clustered  around  many  small  centers  such  as  Bowmanville,  where 
there  was  a  pickle  factory;  Cragin,  a  small  Polish  manufacturing  town; 
Dunning,  the  county  infirmary;  Hermosa;  Hanson  Park;  and  stations 
on  the  Northwestern  Railroad  at  Avondale,  Irving  Park,  Montclaire, 
Jefferson,  and  Norwood  Park.4 

Chicago  in  1900  thus  presented  a  series  of  startling  contrasts:  wide- 
open  prairies  and  densely  crowded,  sunless,  ill-ventilated  tenements 
without  gardens,  shade  trees,  or  grass  in  their  vicinity;5  houses  in  the 

3  "Report  of  the  South  Park  Commission  on  Small  Parks,  1902"  (an  unpublished  report). 

*  Chicago  Tribune,  August  24,  1900. 

s  "Report  of  the  South  Park  Commission." 


MAP  OF  CHICAGO 

-SHOWING- 


EXTENT  OF  SETTLED  AREA 
IN  1899 


LEGEND 


H^!  AREAS  SETTLED  BEFORE  1873 

MiM  GROWTH  OF  SETTLED  AREA  FROM  1873-1899 


NOTE:BAS£  MAP  SHOWS  PRESENT  CITY  STRUCTURE 


PREPARED  BY  HOMER  HOYT 


FIG.  29 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          205 

"red  light"  district  a  few  blocks  from  the  mansions  of  millionaires;  sixn 
teen-story  office  buildings  next  to  three-story  obsolete  buildings ;  large 
local-option  districts  without  a  single  saloon  and  the  Stock  Yards  dis- 
trict with  500  saloons  in  a  few  blocks.  In  all,  there  were  6,373  saloons 
occupying  31  miles  of  street  frontage  in  Chicago,  and  it  was  estimated 
that  the  153,477,900  gallons  of  intoxicating  liquors  consumed  annually 
would  completely  immerse  the  Masonic  Temple.6 

The  period  of  twenty  years  from  1898  to  1918  was  one  of  remarkable 
physical  growth,  as  Figure  30  shows.  The  city  of  Chicago  added  a 
million  to  its  population  from  1900  to  1920,  an  increase  of  60  per 
cent.  Bank  clearings  rose  from  $5,517,335,477  in  1898  to  $16,198,-. 
985,175  in  1915,  or  a  gain  of  194  per  cent.7 

The  value  of  Chicago's  manufactured  products  more  than  tripled 
between  1896  to  1915,  rising  from  $483,000,000  in  the  former  to  $i,- 
723,700,000,  or  357  per  cent  in  the  latter  year.8  Traffic  on  the  elevated 
lines  increased  from  55,204,936  passengers  in  1898  to  197,440,107  in 
1 91 8, 9  or  a  rise  of  258  per  cent.  The  gains  registered  in  the  new  indus- 
tries were  far  more  sensational.  The  number  of  automobiles  in  Chicago 
in  1908  was  multiplied  by  seventeen  before  the  end  of  1920  as  the  num- 
ber rose  from  5,000  to  86,5oo.10  The  number  of  telephones  installed  in 
Chicago  increased  from  11,680  in  1895  to  575,840  in  1920 — a  gain  of 
nearly  fifty  fold."  Electricity  generated  for  Chicago  consumers  mount- 
ed one  hundred  and  thirty-four  fold  in  the  same  period  from  1895  to 
1920,  with  an  increase  from  13,720,000  to  1,831,628,000  kilowatt- 
hours.12  These  gains  were  accomplished  during  a  period  of  slowly  rising 
wholesale  prices  in  the  United  States,  but  the  increase  was  moderate, 
so  that  the  wholesale  price  level  of  1915  was  only  25  per  cent  above 
that  of  1900. 

Notwithstanding  this  marked  growth  of  Chicago  in  the  first  two 
decades  of  the  twentieth  century,  there  was  no  general  land  boom  in 
which  values  took  a  sudden  spurt  in  these  years.  It  is  true  that  the 

6  Chicago  Tribune,  September  8,  1900.  1  Annual  reviews  in  ibid. 

8  Typewritten  statement  from  the  Chicago  Clearing  House  Association  published  in  the 
early  part  of  January  of  each  year. 

9  Letter  to  the  author  from  the  receiver  of  the  Chicago  Transit  Lines. 

10  Report  of  the  License  Department  of  the  city  of  Chicago. 

11  Letter  to  the  author  from  the  statistician  of  the  Illinois  Bell  Telephone  Co. 

12  Commonwealth  Edison  Company  Chicago  Year  Book  (1931),  p.  31. 


206 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


annual  volume  of  new  building  more  than  tripled  from  1900  to  igi6,13 
that  the  annual  number  of  transfers  of  real  estate  and  the  number  of 
lots  subdivided  quadrupled  in  the  same  time  interval,  and  that  land 

FACTORS  IN  THE  GROWTH  OF  CHICAGO 

TELEPHONES'  1=  1,000  KILOWATT  HOURS' I  =  10,000000 

AUTOMOBILES' I  =10000  POPULATION:  /-  IOOOOO 

PASSENGERS CARRltDON  SURFACE  LINES'  1=  lOOOO'OOO 

PASSENGERS  CARRIED  ON  RAPID  TRANSIT  LINES:  1=  I  OOOOOO 
OUTLYING  BANK  DEPOSITS'  I  =$lo'000jOOO 

1000 

900 

BOO 

700 

600 

£00 

400 


I89S     1900   1905    1910     1915     1920    1925     1930    1935 
YEARS 

FIG.  30 

values  of  the  city  of  Chicago  doubled  in  these  sixteen  years,  but  the 
growth  was  gradual.  There  was  no  wild  excitement  and  no  widespread 
public  participation  in  the  real  estate  market.  Land  values  advanced 

13  Measured  by  the  number  of  buildings  or  by  street  frontage  occupied  by  new  buildings. 
The  value  of  new  construction  was  $20,000,000  in  1900  and  $112,000,000  in  1916. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          207 

steadily  in  the  Loop,  the  North  and  Northwest  sides,  along  the  newly 
extended  elevated  lines,  and  in  the  rising  outlying  industrial  and  busi- 
ness centers,  but  the  painful  remembrance  of  the  aftermath  of  the  boqm 
of  1890  checked  any  tendency  toward  reckless  speculation.  While  St. 
Louis,  New  York,  Seattle,  and  the  cities  of  the  Canadian  Northwest  had 
the  experience  of  real  estate  booms  from  1904  to  1915,  the  Chicago  land 
market  remained  quiet  and  unruffled. 

The  narration  of  the  changes  in  land  values  in  Chicago  in  the  period 
from  the  beginning  of  the  twentieth  century  to  the  end  of  the  World 
War  lacks  the  stirring  and  dramatic  episode  of  the  periods  that  pre- 
ceded and  followed  it.  The  character  of  the  growth  of  the  city  and  the 
nature  of  the  land  market  in  the  pre-war  days  nevertheless  deserves 
careful  study,  for  it  presents  the  picture  of  a  market  in  which  there  was 
a  steady  occupation  for  those  engaged  in  the  real  estate  business.  After 
the  hectic  experiences  of  a  boom  and  a  depression  many  of  those  plunged 
from  wealth  to  poverty  sigh  for  a  return  of  the  "good  old  days  when  a 
modest  competence  could  be  earned  by  all  brokers." 

The  leading  features  in  the  Chicago  real  estate  market  for  the  period 
beginning  in  1898  may  now  be  considered. 

Beginning  of  the  recovery  in  Chicago  real  estate. — In  1898  the  Chicago 
real  estate  market  was  at  its  lowest  ebb  of  activity.  Foreclosures  and 
judicial  sales  were  at  their  peak.  Rents,  the  number  of  lots  subdivided, 
and  the  volume  of  real  estate  transfers  were  at  their  lowest  points  since. 
1892.  There  was  an  oversupply  of  office  buildings  in  the  central  busi- 
ness district,  of  old  houses  in  the  intermediate  belt,  and  of  apartments 
in  the  vicinity  of  the  World's  Fair  grounds.  Vacancies  meant  a  total 
loss  of  income,  while  rents  of  occupied  buildings  were  not  only  low  but 
in  many  cases  were  not  promptly  paid.  The  landlords  not  only  ac- 
cumulated a  load  of  bad  debts,  but  they  were  forced  to  accede  to  the 
demands  of  tenants  for  extensive  repairs.  Many  apartment  buildings 
and  downtown  skyscrapers  were  in  the  hands  of  receivers  or  in  more 
favorable  cases  barely  paid  2  per  cent  on  the  investment.  Such  condi- 
tions were  not  conducive  to  the  sale  of  improved  property,  which  was 
further  demoralized  by  the  load  of  foreclosure  sales  hanging  over  the 
market.  For  vacant  lots  in  most  localities  there  was  scarcely  any  de- 
mand at  all.  Subdivision  activity,  as  measured  by  the  number  of  new 
lots  platted  in  the  Chicago  Metropolitan  Region,  had  declined  in  1899 
to  4  per  cent  of  the  peak  volume  of  1891. 


208  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

Even  in  this  trough  of  the  depression  there  were  some  favorable  fac- 
tors. Interest  rates  on  mortgages  in  the  central  business  district  had  de- 
clined to  4  and  even  3^  per  cent,14  with  the  result  that  long-term  lease- 
holds were  capitalized  on  a  4  instead  of  a  5  per  cent  basis.  This  alone 
would  tend  to  raise  downtown  land  values  25  per  cent,  and  although  its 
effect  did  not  immediately  show  itself  in  such  a  blanket  increase,  the 
lowering  of  the  capitalization  rate  was  now  operating  to  increase  valua- 
tions. Moreover,  even  in  1898  apartment  buildings  were  being  built 
along  the  line  of  the  South  Side  elevated  system,  and  houses  were  going 
up  along  the  tracks  of  the  Northwestern  elevated  railroad,  which  was 
then  in  process  of  construction. 

In  1899  there  was  a  general  improvement  in  business  conditions. 
Wages  advanced  5  and  10  per  cent.15  There  were  not  one-fourth  as 
many  vacant  flats  in  the  spring  of  1899  as  in  the  spring  of  i898.16  Office 
rents  were  lower,17  but  rents  elsewhere  ceased  to  decline  and  were  more 
promptly  paid.18  Capitalists  began  to  buy  property  at  foreclosure 
sales.19 

New  transportation  systems. — One  of  the  factors  that  was  of  the  great- 
est aid  in  the  renewal  of  real  estate  activity  was  the  improvement  in 
transportation.  From  1890  to  1900  there  had  been  a  revolutionary 
change  in  the  internal  transportation  system  of  Chicago.  Elevated 
lines  had  been  constructed  on  the  South  Side,  the  West  Side,  and  finally 
on  the  North  Side,  and  these  were  at  last  linked  together  in  a  union 
loop  in  the  central  business  district  in  1900,  which  thereafter  became 
known  as  the  "Loop."  Of  even  greater  importance  was  the  substitu- 
tion of  electric  power  for  steam  and  horse  power  in  the  elevated  and 
surface  lines.  From  1895  to  1897  many  new  street-car  lines  were  laid  in 
the  northwest  section  of  the  city,  and  these  new  lines  were  being  oper- 
ated by  electric  power.  In  addition,  horse-car  lines,  the  slowest  parts 
of  the  transportation  system,  were  being  rapidly  electrified  at  this  time, 
and,  finally,  electric  power  was  installed  in  the  cable  trunk  lines.20 

Effect  on  different  sections  of  the  city. — Prior  to  1893  the  South  Side 
had  by  far  the  best  transportation  facilities,  with  four  railroads  providing 
good  suburban  service.  The  North  and  West  sides  not  only  had  fewer 

Ji  Chicago  Tribune,  August  14  and  September  4,  1898. 

15  Ibid.,  March  4,  1899.  l8  Ibid.,  December  31,  1899. 

16  Ibid.,  March  12,  1899.  '»  Ibid.,  March  5,  1899. 
J7  Ibid.,  January  29,  1899.  20  See  Fig.  31. 


MAP  OF  CHICAGO 

-SHOWING - 

_     SURFACE  AND  ELEVATED  LINES 
IN  1902 

LEGEND 


ELECTRIFIED  JULY  ' 
CABLE  LINES  BUILT  FROM  1892  TO  1894 

ELECTRIFIED  IN  JULT  1906 
— ^—    ELECTRIC  SURFACE  LINES  BUILT  FROM  IS92 

TO  I9O2 
— —    ELEVATED  LINES  COMPLETED  FROM  1892 


mmim 


FIG.  31 


210  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

railroads  and  cable  lines,  but  they  were  further  greatly  handicapped  by 
the  barrier  of  the  Chicago  River,  with  its  frequent  opening  and  closing 
of  bridges.  The  rapid  decline  of  traffic  on  the  Chicago  River,  together 
with  the  new  elevated  lines,  whose  high  bridges  remained  permanently 
open,  removed  the  disadvantageous  factor  affecting  the  North  and 
West  sides. 

In  the  early  twentieth  century  the  side  of  the  city  that  grew  most 
rapidly  was  the  North  Side  and  the  northwest  sections.  The  South 
Side  suffered  from  the  aftermath  of  the  World's  Fair  boom,  the  obsoles- 
cence of  its  buildings,  and  the  spread  of  vice  elements.  Nevertheless, 
the  growth  of  its  great  industrial  plants  held  a  large  population  and 
finally  enabled  new  high  residential  sections  to  be  developed  on  the 
edges  of  its  old  areas. 

There  was  a  certain  pattern  of  growth,  however,  that  affected  all 
sections  of  the  city.  The  elevated  lines  in  the  three  sections  were  being 
pushed  into  undeveloped  tracts,  and  along  these  newly  constructed 
elevated  structures  on  the  South  and  West  sides,  and  on  the  North 
Side  after  1900,  rows  and  rows  of  apartment  buildings  were  being  erected. 
The  migration  of  factories  from  the  river  was  beginning,  and  industrial 
plants  were  filling  in  the  area  near  the  Loop  on  the  three  sides  of  the 
city,  and  were  also  moving  outward  to  belt-line  locations  or  to  newly 
created  industrial  districts.  The  direction  of  growth  of  the  high-grade 
residential  area  was  proceeding  outward  in  straight  lines  and  along  the 
Lake  Shore.  The  newly  arriving  immigrants  were  pushing  the  old  mem- 
bers of  foreign  colonies  farther  out.  Meanwhile,  the  central  business 
district  was  drawing  support  from  all  three  sections  of  the  city  and 
developing  as  an  exclusive  retail  center. 

Because  of  the  similarity  of  movements  taking  place  in  concentric 
circles  around  the  central  hub  of  the  city,  it  is  desirable  to  discuss  the 
movement  of  land  values  for  this  period  with  reference  to  the  character 
of  the  use  and  occupancy  of  the  Loop  and  of  the  different  belts  of  land 
encircling  the  Loop. 

The  central  business  district:  office  buildings. — With  the  cessation  of 
the  construction  of  new  office  buildings,  the  large  supply  of  vacant 
offices  existing  in  1900  had  been  almost  entirely  absorbed  by  1902. 
Rents  were  advanced  15  per  cent  in  1902."  Plans  for  the  erection  of 
eighteen  new  buildings  to  cost  over  $io,ooo,ooo22  caused  the  City  Coun- 

21  Economist,  May  15,  1902.  ™  Ibid.,  January  25,  1902. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          211 

cil  to  remove  the  old  limit  of  130  feet  on  the  height  of  buildings  and  to 
establish  a  new  maximum  height  of  260  feet.23  In  1903  office  rents  were,, 
again  advanced  1 5  per  cent,  and  buildings,  such  as  the  Monon  and  the 
Caxton,  were  fully  rented  for  the  first  time.24  Downtown  office  property 
was  thus  once  more  a  profitable  investment. 

The  Loop  retail  district. — The  completion  of  the  Northwestern  ele- 
vated lines  to  Wilson  Avenue  in  1900  and  the  growing  traffic  on  all  the 
elevated  roads  had  greatly  increased  the  throng  of  shoppers  in  the  Loop 
retail  district.  Locations  on  State  Street,  the  "Main  Street"  of  two 
million  people,  were  in  greater  demand  than  ever  before.  The  value  of 
lots  on  State  Street  from  Washington  to  Van  Buren  streets  reached 
levels  by  1904  "that  would  not  have  been  dreamed  of  a  few  years  ago, 
not  even  in  the  boom  times  preceding  the  World's  Fair,"25  and  in  1906 
the  Economist  declared  that  "there  was  nothing  in  the  world  so  valuable 
as  State  Street  frontage."26  Advancing  business  rents  made  possible  by 
a  larger  volume  of  sales  at  higher  prices  and  a  decline  in  the  capitaliza- 
tion rate  from  5  to  4  per  cent  had  raised  the  peak  prices  of  State  Street 
frontage  in  1890  to  levels  that  were  two  and  three  times  as  high.  In  1903 
the  southwest  corner  of  State  and  Adams  streets  was  leased  on  a  basis  • 
of  $20,731  a  front  foot.27  In  1905  frontage  on  State  Street  between 
Washington  and  Madison  streets  was  leased  on  a  valuation  of  $22,500 
a  front  foot,28  and  a  lease  on  the  basis  of  $15,300  a  front  foot  was  refused 
for  a  lot  on  State  Street  south  of  Jackson  Boulevard.29  In  1906  the 
corner  of  State  and  Quincy  streets  was  capitalized  at  $26,114  &  front 
foot,  and  State  Street  north  of  Madison  Street  at  $24,419  a  front  foot.30 
Ten  years  before,  $10,000  a  front  foot  had  been  regarded  as  a  top  price. 

Retail  trades  were  expanding  until  by  1907  they  occupied  the  ground 
floors  of  the  entire  Loop  area.31  Firms  that  could  not  afford  to  pay  the 
high  rents  demanded  on  State  Street  moved  to  Wabash  Avenue  or  to 
Dearborn,  Clark,  and  Wells  streets,  or  to  the  east-west  thoroughfares.^ 
Lots  on  Wabash  Avenue,  as  a  result  of  the  change  from  wholesale  to 
retail  use,  reached  the  highest  prices  in  their  history.  Michigan  Avenue/ 
evolving  as  a  hotel  center,  also  had  a  remarkable  transformation.  In 

23  Ibid.,  March  i,  1902. 

24  Ibid.,  February  7,  1903.  28  Ibid.,  October  7,  1905. 

25  Ibid.,  December  31,  1904.  ^  Ibid.,  September  30,  1905. 

26  Ibid.,  March  24,  1906.  3°  Ibid.,  March  10,  1906. 

27  Ibid.,  May  23,  1903.  31  Ibid.,  August  24,  1907. 


212  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

1902  a  lot  on  Michigan  Avenue  south  of  Jackson  was  leased  on  a  basis 
of  $5,707  a  front  foot.33 

Downtown  wholesale  area. — The  wholesale  firms  in  the  area  south  of 
Monroe  Street  and  west  of  Wells  Street  had  recovered  from  the  panic 
of  1893  within  four  years.  A  remarkable  expansion  of  business  had  by 
1902  filled  all  the  available  space  at  advancing  rents.  Ten  new  build- 
ings, with  a  total  of  1,063,000  square  feet  of  floor  space,  were  erected 
during  1903  and  1904,  creating  a  temporary  oversupply  of  over  1,000,- 
ooo  square  feet  in  1904,  which  was,  however,  entirely  absorbed  during 
1 905." 

Summary:  downtown  area. — Thus  nearly  the  whole  of  the  downtown 
area  profited  from  the  growing  retail  and  wholesale  businesses  and  the 
enlarged  demand  for  office  space.  In  addition,  the  prosperity  of  the 
financial  interests  caused  the  erection  of  new  bank  buildings  on  La- 
Salle  Street.  Buyers  sought  old  run-down  properties  yielding  a  low  re- 
turn on  the  investment  which  with  modern  improvements  and  supe- 
rior management  could  be  made  to  yield  8-12  per  cent  on  their  original 
cost.34  Leases  made  in  the  preceding  decade  were  sold  at  large  pre- 
miums. Central  business  property  had  become  concentrated  in  fewer 
owners  and  tied  up  to  an  increasing  extent  under  long-term  leases,  so 
that  sales  of  land,  free  from  leases,  were  less  frequent. 

Expanding  wholesale  and  warehouse  interests. — The  expansion  of  the 
retail  area  in  the  Loop  district  and  the  higher  land  values  resulting 
therefrom  forced  the  warehouses  and  wholesale  houses  that  were  for- 
merly located  on  Wabash,  Wells,  and  on  other  streets  adjacent  to  the 
Loop  to  move  into  the  old  residential  area  near  the  Loop  that  had  long 
been  dormant.  On  the  near  South  Side,  Clark  at  Sixteenth  Street,35 
Indiana  at  Sixteenth  Street,36  and  Wabash  near  Twenty-third  Street37 
began  to  develop  as  warehouse  centers  in  1903.  On  the  near  North  Side 
on  Illinois  and  Erie  streets  east  of  St.  Clair  Street,  a  section  of  reclaimed 
land  was  sold  for  warehouse  purposes  in  I9O7.38  In  1902  the  first  auto- 
mobile shop  was  leased  on  Michigan  Avenue  near  Fourteenth  Street.39 
In  1903  a  new  furniture  center  was  established  at  Twelfth  and  Michigan 

32  Ibid.,  November  22,  1902. 

33  Ibid.,  November  19,  1904;  September  2,  1905. 

34  Ibid.,  June  27,  1903.  37  Ibid.,  March  10,  1906. 

35  Ibid.,  September  19,  1903.  38  Ibid.,  October  19,  1907. 

36  Ibid.,  October  10,  1903.  3»  Ibid.,  January  n,  1902. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          213 

and  at  Sixteenth  and  Indiana  Avenue.  At  this  point  623  agencies  out  of 
a  total  of  4,000  in  the  United  States  sold  over  $40,000,000  worth  of « 
furniture  in  1 903.4° 

Other  large  mail-order  and  wholesale  firms  moved  north  and  west 
from  their  old  locations  near  the  Loop.  In  1904  Sears,  Roebuck  and 
Company  left  their  building  at  Canal  and  Washington  streets  to  go  to  a 
huge  new  building  at  Kedzie  Avenue  near  Twelfth  Street.41  In  1906 
Montgomery  Ward,  Sprague- Warner,  and  the  Edward  Hines  Lumber 
Company  moved  to  the  north  branch  at  Chicago  Avenue.42 

New  manufacturing  centers. — Old  manufacturing  centers  near  the 
Loop  continued  to  grow  in  this  period.  New  boot  and  shoe  manufac- 
turing plants  were  located  on  the  district  from  Grand  to  Chicago  ave- 
nues, west  of  Wells  Street  to  the  river,  while  refrigerating  plants  for 
fruits  and  vegetables  were  expanding  on  Illinois  and  Michigan  east 
of  State  Street.  On  the  near  West  Side,  machinery  houses  were  growing 
in  the  area  on  Canal  and  Clinton  streets  between  Washington  and 
Randolph  streets,  and  south  of  Adams  Street  high-class  manufacturing 
plants  were  pushing  toward  Roosevelt  Road. 

The  most  important  manufacturing  developments,  however,  were  in 
regions  farther  from  the  Loop.  The  Western  Electric  Company  moved 
from  Clinton  and  Congress  streets  six  miles  southwestward  to  Twenty- 
second  and  Cicero  Avenue  on  the  Chicago  Belt  Line  in  I9O3.43  The' 
Central  Manufacturing  district,  from  Thirty-fifth  to  Thirty-ninth 
streets,  Ashland  to  Morgan  Street,  starting  in  1902  with  the  purchase  of 
the  ground  for  $900,000,  had  developed  rapidly  from  1904  to  1906  when 
twenty-five  manufacturing  plants  were  located  there.44  Pullman  was 
growing  as  an  industrial  center.  The  Corn  Products  Company  bought 
140  acres  for  their  new  plant  at  Summit  in  i9o6.4S  The  Clearing  rail- 
road yards  were  built  and  factories  began  to  be  erected  near  them. 
Two  new  plants  were  built  at  the  Stock  Yards.46 

The  most  remarkable  growth  of  manufacturing  plants,  however, 
took  place  in  the  Calumet  region.  The  commerce  of  the  Calumet  River 
which  had  been  only  one-tenth  of  that  of  the  Chicago  River  in  1889  had 
steadily  advanced  as  that  of  the  Chicago  River  declined.  In  1906  the 

40  Ibid.,  November  7,  1903. 

41  Ibid.,  December  24,  1904.  ^  Ibid.,  September  21,  1907. 
**  Ibid.,  March  24,  1906.  4S  Ibid.,  December  i,  1906. 
43  Ibid.,  October  24,  1903.  *6  Ibid.,  December  17,  1904. 


214  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

commerce  of  the  two  rivers  was  equal  in  value.  In  1916  the  traffic  on  the 
Calumet  was  five  times  as  great  as  that  on  the  Chicago  River.47  The 
iron  and  steel  industries  were  leading  factors  in  this  growth,  although 
grain  and  lumber  were  scarcely  less  important.  There  were  sixty  grain 
elevators  in  South  Chicago  in  ipo;.48  The  development  of  this  region 
was  not  confined  within  the  city  limits  of  Chicago,  although  the  benefit 
of  Chicago  railroad  rates  aided  the  new  cities  growing  beyond  its 
boundaries.  Indiana  Harbor,  Indiana,  was  being  boomed  in  I903.49 
Gary  was  founded  in  1906. 

Value  of  railroad  and  manufacturing  property. — The  lower  value  of 
manufacturing  sites  at  a  distance  from  the  central  business  district  was 
one  of  the  reasons  for  the  more  rapid  growth  of  the  outer  manufacturing 
districts.  Land  on  the  South  Side  adjacent  to  the  Loop  sold  for  not 
less  than  $20  a  square  foot.  On  the  West  Side,  at  Madison  and  Clinton, 
the  Northwestern  Railroad  paid  $10  a  square  foot  for  its  depot  site. 
A  little  farther  out  from  the  center  of  the  city,  at  Sixteenth  and  Indiana 
Avenue,  Twenty-second  and  Dearborn  streets,  and  at  Chicago  Avenue 
and  the  north  branch  of  the  river,  the  value  was  only  $2.00  a  square 
foot.  On  the  West  Side,  the  value  of  land  along  the  Chicago  River 
ranged  from  $10  a  square  foot  at  Madison  Street  to  $5.00  a  square  foot 
at  Harrison  Street,  $1.25  a  square  foot  at  Twenty-second  Street,  and 
5  cents  a  square  foot  at  Crawford  in  the  period  from  1905  to  1908.  Land 
at  St.  Clair  and  Illinois  streets  sold  as  low  as  60  cents  a  square  foot  in 
1907,  in  the  Central  Manufacturing  District  at  from  25  to  60  cents  a 
square  foot,  at  Arthington  and  Kedzie  avenues  30  cents  a  square  foot  in 
1904,  at  Lake  Michigan  and  the  Calumet  River  45  cents  a  square  foot 
in  1905,  and  at  Twenty-second  and  Cicero  Avenue  at  5  cents  a  square 
foot  in  1906. 

Fashionable  residential  property. — The  Lake  Shore  Drive,  from 
Division  to  North  Avenue,  valued  at  from  $1,000  to  $1,500  a  front  foot, 
was  the  center  of  fashion  after  1900.  The  building  of  new  high-class 
residences  had  practically  ceased  from  1900  to  1908,  because  old  man- 
sions on  Michigan  and  Prairie  avenues  could  be  bought  at  prices  far 
below  their  original  cost.  The  residence  at  1922  Calumet  which  cost 
$100,000  was  sold  with  100  feet  of  ground  for  $33,500  in  I9o8.s°  The 

47  Chicago  Tribune,  December  30,  1916. 

48  Economist,  February  9,  1907. 

49  Ibid.  so  fbid.,  October  24,  1908. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR         215 

John  W.  Gates's  mansion  at  2944  Michigan  Avenue  that  cost  $300,000 
was  sold  with  145  feet  of  ground,  valued  at  $1,000  a  front  foot  in  the 
eighties,  for  $65,500  in  the  same  year.51  As  fine  homes  were  being  aban- 
doned for  apartments,  $4o,ooo-$6o,ooo  houses  were  offered  for  rent  at 
$200  a  month.  Kenwood  was  the  preferred  residential  section  of  the 
South  Side  at  this  time,  with  deep  lots  on  Woodlawn,  Ellis,  and  Green- 
wood avenues  from  Forty-fifth  to  Fifty-first  streets  selling  for  only  $200 
a  front  foot.  Grand  and  Drexel  boulevards  were  selected  as  locations 
for  high-grade  apartments,  and  their  lots  were  valued  at  from  $200  to 
$300  a  front  foot. 

Apartments. — There  was  a  rush  to  apartment  construction  at  this 
time.  Even  during  the  extreme  depression  of  1897  and  1898,  specula- 
tive builders  had  erected  apartments  along  the  line  of  the  South  Side 
elevated  road.  By  the  fall  of  1901,  the  excess  of  apartment  space  built 
during  the  World's  Fair  boom  had  been  largely  filled.52  In  1902  apart- 
ment rents  advanced  10  per  cent.53  Of  9,200  apartments  and  houses  in 
the  hands  of  leading  agents  in  1903,  only  131  were  for  rent.54  Apart- 
ments varied  in  size  and  quality  from  the  modest  two  flats  of  the  West 
Side  to  the  de  luxe  apartments  erected  by  Potter  Palmer  on  the  Lake 
Shore  Drive  to  rent  for  $1,000  a  month.55  Fine  apartments  renting  for 
from  $100  to  $300  a  month  were  being  built  on  Grand  and  Drexel 
boulevards,  on  Michigan  Avenue  near  Garfield  Boulevard,  on  Cornell 
and  East  End  avenues  near  Fifty-fourth  Street,  and  on  Hyde  Park 
Boulevard. 

Old  residential  areas. — Rents  of  old  houses,  although  more  promptly 
paid  than  in  1897,  were  lower  in  1908  with  steam  heat  added  than  in 
1897,  and  of  course  were  far  below  the  peak  levels  of  1892,  as  Table  X 
shows.56 

The  increase  in  immigration  and  the  growth  of  the  negro  section  was 
causing  an  expansion  of  some  of  these  old  areas.  The  ghetto  was  over- 
flowing westward  and  a  new  ghetto  was  forming  between  Harrison  and 
Fourteenth  streets,  Racine  and  Robey  streets,  by  I9O3.57  The  colored 
belt  had  burst  the  boundaries  that  had  prior  to  1900  confined  it  be- 
tween State  and  Federal  streets  from  Twenty-second  and  Thirty- 

s1  Ibid.,  May  23,  1908. 

52  Ibid.,  September  7,  1901.  &  Ibid.,  February  i,  1902. 

» Ibid.,  January  3,  1903.  &  Ibid.,  April  n,  1908. 

54  Ibid.,  October  10,  1903.  &  Ibid.,  May  17,  1903. 


2l6 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


ninth  streets  where  negroes  had  paid  8  per  cent  higher  rents  than  were 
paid  for  far  better  houses  east  of  State  Street.  By  1 908  the  colored  people 
had  occupied  Wabash  Avenue  solidly  from  Twenty-sixth  to  Thirty- 
ninth  Street,  had  taken  possession  of  many  houses  on  Vernon  and  Calu- 
met avenues  in  the  same  limits,  and  had  placed  thirty-two  of  their  race 
on  Groveland  Avenue  from  Twenty-ninth  to  Thirty- third  Street.  An 
organization  of  white  property  owners  endeavored  to  halt  the  advance 
east  of  Wabash  Avenue  by  an  agreement  not  to  rent  or  sell  to  colored 
people.  The  effect  of  the  appearance  of  the  first  colored  family  in  a 
neighborhood  was  thus  described:  "The  first  colored  man  to  move  into 

TABLE  X 
RENTS  PER  MONTH  OF  SELECTED  OLD  HOUSES  IN  CHICAGO, 

1892,  1897,  AND  1908 


Location 

1892 

1897 

1908 

South    Park    near    Thirty-third 
Street 

$7<r 

$4.0 

$»e 

South    Park    near    Thirty-third 
Street 

6q 

sir 

2< 

Lake  Park—  Oakwood  Boulevard 

4O 

•ic—  77    qo 

Vernon  near  Forty-third  Street 

7O 

4S* 

Wabash-Twentieth  Street   

c?o 

40 

348  North  Clark  Street  
Elm-Dearborn  Street  
Elm-Dearborn  Street  

60 
83-33 

65 

SO 

60* 
65* 

Elm-Dearborn  Street 

7<r 

50* 

Elm-Dearborn  Street 

"?O 

So* 

*  Steam  heat  added. 

a  community  of  this  character  is  compelled  to  pay  higher  rent  but  as 
soon  as  he  is  discovered,  rents  throughout  the  entire  section  go  down, 
and  it  is  with  difficulty  that  any  one  is  secured  to  occupy  adjoining  flats 
or  houses."58 

New  residential  areas. — In  1907  the  branch  of  the  South  Side  elevated 
road  was  completed  to  Englewood,  and  the  branch  of  the  Northwestern 
elevated  line  was  finished  to  Ravenswood.  In  1908  the  Northwestern 
elevated  line  was  extended  from  Wilson  Avenue  to  Evanston.  The 
most  rapid  growth  took  place  at  the  termini  of  these  extensions.  By 
1908  there  was  a  population  of  100,000  around  the  Wilson  Avenue 
station.  Sixty- third  and  Halsted  streets  and  Lawrence  and  Kimball 
avenues  were  developing  rapidly  as  important  outlying  business  Gen- 
s'5 Ibid.,  August  8,  1908. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          217 

ters  as  a  result  of  these  elevated  lines.  The  Douglas  Park  branch  of  the 
Metropolitan  elevated  line  was  being  extended  along  Twenty-second 
Street  to  carry  the  employees  of  the  Western  Electric  plant  to  and  from 
their  work. 

The  Chicago  land  market  as  a  whole,  1900-1908.  —  The  foregoing  ac- 
count shows  that  in  certain  spots,  as  in  the  central  business  district, 
in  the  Calumet  region,  and  along  the  new  elevated  extensions,  land 
values  were  constantly  making  new  high  records  from  1900  to  1908. 
It  was  by  no  means  true,  however,  that  land  values  were  advancing 
generally  or  that  real  estate  activity  was  distributed  throughout  the 
entire  Chicago  area.  In  fact,  notwithstanding  the  improvement  in  gen- 
eral conditions,  land  values  in  many  sections  continued  to  decline  in 
this  period.  It  was  not  that  real  estate  conditions  grew  worse,  but  that 
landholders,  finding  that  the  market  for  certain  kinds  of  property  did 
not  improve,  at  least  reluctantly  accepted  a  lower  price  than  their  ask- 
ing price  in  1900.  Thus  sixty-seven  parcels  of  property  scattered  all 
over  Chicago  were  valued  by  George  C.  Olcott  at  20  per  cent  less  in 
1910  than  they  were  appraised  at  by  William  A.  Bond  in  1898  and 


Several  times  in  this  period  it  was  thought  that  the  turn  of  the  tide 
had  come.  Thus  in  March,  1902,  the  editor  of  the  Economist  said: 

Events  now  known  to  everybody  prove  conclusively  that  the  market  has  started 
on  a  career  of  greater  activity.  Nor  can  it  be  said  any  longer  that  the  downtown 
area  is  the  only  one  where  large  business  is  being  done.  All  the  localities  are  coming 
in,  notably  the  north  shore,  the  west  side,  the  vacant  properties  of  the  southwest, 
the  Calumet  district  and  other  areas. 

The  ebb  has  certainly  been  long  enough  and  trying  enough  to  the  brokerage 
fraternity  and  the  owners  of  property,  beginning  as  it  did  in  1893  and  continuing 
to  about  the  close  of  the  year  1900.  We  are  not  entirely  through  all  the  phenomena 
of  a  depressed  market  for  there  are  always  some  remnants  of  insolvency  and  bad 
luck  after  the  market  has  taken  a  turn  for  the  better.60 

In  spite  of  this  hope  that  the  market  for  vacant  property  would 
soon  revive,  over  two  years  later  at  the  end  of  1904  the  following  pes- 
simistic accounts  were  given: 

From  month  to  month  and  from  year  to  year  they  [holders  of  outlying  vacant 
property]  have  been  looking  forward  hopefully  to  a  revival  in  the  speculative  inter- 

s' From  the  records  of  William  A.  Bond  &  Co.  There  is,  of  course,  the  possibility  that  the 
two  appraisers  had  different  standards  of  valuation,  so  that  this  comparison  taken  alone  is 
not  conclusive. 

60  Economist,  March  i,  1902. 


2i8  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

est  which  would  encourage  subdividing.  The  speculative  interest  in  outlying  prop- 
erty is  entirely  absent,  nor  is  there  any  inquiry  for  any  property  of  this  kind  except 
for  immediate  development.61 

The  basic  reason  for  the  pessimistic  view  has  been  that  vacant  lots  no  longer  are 
sold  in  any  appreciable  amount,  nor  will  constant  offering  and  continuous  adver- 
tising induce  the  sale  of  such  lots.  There  is  in  Chicago  today  within  the  corporate 
limits  enough  of  vacant  subdivided  property  to  hold  double  the  number  of  inhabit- 
ants Chicago  contains  at  the  present.62 

Again  in  1905  when  the  demand  for  State  Street  frontage  was  ex- 
traordinary, forty  acres  south  of  Jackson  Park  on  Jeffery  Avenue  for 
which  $10,000  an  acre  was  offered  in  1893  was  sold  for  $3,125  an  acre. 
At  the  same  time,  the  depressed  condition  of  the  market  for  vacant 
land  was  shown  by  the  following  account : 

There  are  a  large  number  of  acre  tracts  in  all  sections  to  be  purchased  at  prices 
far  below  anything  that  has  prevailed  for  years.  Instances  can  be  cited  where  acre 
property  can  now  be  purchased  at  as  low  a  figure  as  it  sold  for  25  years  ago,  but  it 
is  the  uncertainty  of  a  favoring  gale  creating  a  popular  demand  in  one  particular 
section  for  lots  for  improvement  which  makes  buyers  hesitate.  One  thing  is  quite 
certain  and  that  is,  that  the  kind  of  cheap  lot  trade  which  Chicago  enjoyed  prior  to 
the  World's  Fair  will  not  soon  be  duplicated  in  this  section.6^ 

Again  after  the  panic  of  1907  W.  D.  Kerfoot  said: 

Ever  since  the  panic  of  1893,  real  estate  has  declined Whether  real  estate 

will  show  a  decline  depends  upon  affairs  in  the  financial  and  commercial  world  in 
the  next  few  months,  but  I  do  not  look  for  any  material  change  in  conditions.  The 
fact  of  the  matter  is  that  real  estate  is  at  about  as  low  a  figure  now  as  it  is  possible 
for  it  to  be>» 

The  condition  of  Chicago  real  estate  was  made  but  little  worse  by  the 
panic  of  1907,  for  it  had  been  in  a  depressed  condition  in  most  localities 
for  years,  as  the  following  account  shows: 

Prices  of  real  estate  in  any  direction,  with  the  exception  of  the  North  Shore  and 
central  business  property,  were  higher  fifteen  years  ago  than  now,  while  the  popula- 
tion has  increased  by  over  a  million  people.  It  will  thus  be  seen  that  there  has  been 
no  active  general  market  in  any  section  such  as  characterized  the  period  prior  to 
1893.  This  is  a  favorite  time  for  the  small  investors  in  the  various  specialties.  If  he 
wishes  to  buy  acres,  they  can  be  had  within  a  short  distance  of  the  heart  of  the  city 
at  one-third  to  one-fourth  the  prices  prevailing  fifteen  years  ago  and  as  for  single 
lots  and  houses,  there  never  was  a  more  opportune  time.  Acre  and  half  acre  lots  in 
almost  any  direction  are  selling  at  about  what  a  lot  25  by  125  feet  [note:  there  are 

61  Ibid.,  November  26,  1904. 

63  Ibid.,  December  17,  1904:  letter  of  Aaron  McKay. 

63  Ibid.,  July  29,  1905.  6<  Ibid.,  December  14,  1907. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR         219 

ten  such  lots  in  an  acre]  sold  for  years  ago,  with  all  the  improvements  in  and  with 
more  convenient  transportation.  As  to  improved  residence  property  in  the  older 
sections,  many  houses  are  for  sale  at  a  little  more  than  the  value  of  the  land,  and 
these  can  be  bought  on  favorable  terms.  It  should  not  be  thought  that  these  condi- 
tions are  the  result  of  the  distress  of  the  money  market.  They  have  prevailed  for 
years;  only  the  present  seems  a  more  favorable  time  to  avail  one's  self  of  them.6* 

In  this  period  subdividers  could  only  sell  vacant  lots  by  building 
houses  or  apartments  on  them  and  selling  land  and  building  together. 
Although  seventeen  years  had  passed  since  the  peak  of  1890,  there  was 
no  general  boom  in  1907,  as  there  has  been  at  seventeen-year  intervals 
prior  to  1890.  Either  the  excesses  of  the  boom  of  1890  had  produced  an 
unusually  long  aftermath  or  else  land  values  had  not  kept  pace  with  the 
growth  of  the  city.  Figures  32  and  33  indicate  the  land  values  of 
Chicago  in  1910. 

THE  PERIOD  FROM  1908  TO  1918 

In  the  period  from  1908  to  1918,  while  the  physical  volume  of  pro- 
duction in  the  United  States  increased  50  per  cent,  the  dollar  value  of 
manufacturers,  wholesale  trade,  and  bank  clearings  in  Chicago  doubled, 
as  Table  XI  shows. 

At  the  same  time,  the  indices  of  Chicago  real  estate  activity  (Table 
XII)  indicate  a  high  volume  of  building  until  1917,  a  peak  of  transfers 
in  1916,  and  a  peak  of  subdivision  activity  in  1914.  Compared  with 
1890,  however,  these  were  only  minor  peaks. 

In  1909  Chicago  land  values  were  on  the  whole  lower  than  in  1890 
when  the  city  was  only  half  as  large,  and,  according  to  William  E. 
Harmon,  they  were  no  higher  than  other  cities  with  half  the  population. 
Current  writers  gave  their  explanations  as  to  why  the  prices  of  land 
fluctuated  above  and  below  what  was  warranted  by  the  normal  growth 
of  the  city.  Thus  W.  L.  Bonney  said: 

Under  existing  conditions,  the  market  prices  of  all  commodities  including  real 
estate  moves  by  a  series  of  violent  advances  and  reactions.  This  seems  illogical 
but  it  is  the  process  of  price-making  in  any  investment  market.  A  quiet,  steady, 
lady -like  movement  is  unknown  in  commercial  systems.  This  fact  gives  the  specu- 
lator his  trade  and  the  investor  his  opportunity.  In  real  estate  this  systole  and 
diastole  covers  long  periods,  a  decline  continuing  for  many  years  and  an  advance 
running  sometimes  four  or  five  years.  The  last  decline  in  Chicago  has  persisted 
since  1893  and  has  carried  prices  down  to  a  point  as  low  as  prices  in  Cleveland, 
Baltimore,  Pittsburgh  or  Detroit.66 

65  Ibid.,  November  16,  1907.  M  Ibid.,  August  28,  1909. 


MAP  OF  CHICAGO 


RESIDENTIAL  LAND  VALUES  PER  FRONT  FOOT 

1910 


FRONT  FOOT  VALUES  IN  DOLLARS 


100  AND  OVER 
50  TO  99 
26  TO  49 
4  TO  25 


BASED  ON  GEORGE  C.OLC07T 
LAND  VALUE  MAP  OF  CHICAGO  FOR  1910 


PREPARED  BY  HOMER  HOYT 


ill 

iiiijijiiijiiji  !:!!ii!!!2|iii;iiiil!ii!iiii;-Wi 


FIG.  32 


MAP  OF  CHICAGO 

-SHOW  iNG- 
LAND  VALUES -19 10 

AVERAGE  VALUES  FOR  960  ACRE  TRACTS  IN  DOLLARS  PER  ACRE 
SOURCE :  GEORGE  C.OLCOTT'S  LAND  VALUE  MAPS  OFCHICAGO-I9IO 


-l — T.*»w 

-i-'"""      ! 


300  ;  300    ;300     '. 


1380  ;  880   '3100  !  9200  '  11/440; 
!          i 


11300  i  •      v     i  ! 

9QCJ  ?*»*  |      ;  2600  1  6700  j  I3,eoq<!  600>  ^  1 0,700;  7000 


i— A* 


75P'  !  650   |  850   i  2500!  31*00 1  1100  \  2222>>I36 

' r-vi /I"— -I i f"-^ 


FIG.  33 


222 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


TABLE  XI 

ANNUAL  AMOUNT  OF  BANK  CLEARINGS,  MANUFACTURES,  WHOLESALE 

AND  PRODUCE  TRADE  IN  CHICAGO,  1908-18 

(Millions  of  Dollars) 


Year 

Bank 
Clearings* 

Value  of 
Manufactures  f 

Wholesale 
and  Produce 
Trades! 

Wholesale- 
Price 
Index  § 

Index  U.S. 
Production  || 

1008 

$11,854 

$1,598 

$1,685 

92 

94 

IOOO 

I^.Q7Q 

,783 

1,89^ 

99 

106 

1910  

IQII.  . 

13,930 
13,926 

,867 
>  213 

2,046 
2,027 

103 
95 

no 

105 

IQI2 

if  281 

078 

2    2o6 

IOI 

122 

IQII 

16  073 

000 

2    114 

IO2 

1  2O 

IQI4 

ic  603 

660 

2    122 

IOO 

no 

IQI5 

16,  ioo 

,  724. 

2,28l 

IOI 

HO 

1016 

2O,  ^4-2 

2,112 

2,841 

125 

110 

IQI7 

24.07^ 

2,48l 

3   ,2OO 

IC5 

141 

1018..  , 

2C.O^O 

3,044 

I,ll8 

183 

142 

*  Economist,  annual  reviews. 

t  Chicago  Tribune,  annual  reviews. 

I  Ibid. 

§  Wholesale-price  index  of  Professors  G.  F.  Warren  and  F.  A.  Pearson,  from  the  Cleveland  Trust  Co.  chart, 
"Business  Activity  and  Four  Price  Series,  1831-1932."  The  average  for  the  five  years  from  1910  to  1914,  inclu- 
sive, is  taken  as  100. 

|1  Warren  M.  Persons,  Forecasting  Business  Cycles  (1931),  pp.  137-47.  Total  production  for  1905  is  taken 
as  100. 


TABLE  XII 

ANNUAL  VOLUME  OF  REAL  ESTATE  TRANSFERS,  NEW  BUILDINGS, 
LOTS  SUBDIVIDED,  AND  LONG-TERM  LEASES 
IN  CHICAGO,  1908-18 


Year 

No.  of 
Transfers* 

No.  of 
Bldg. 
Permits* 

Frontage 
New 
Bldgs.* 

Cost  of 
New  Bldgs.* 

No.  of 
Lots  Sub- 
divided in 
Cook 
County 

Long-Term 
Leases 
(Millions  of 
Dollars) 

1908  
IQOO 

30,327 

7X      O74. 

10,771 
1  1    241 

291,655 

HO    1^1 

$  66,204,080 
oo  ^oo  ^80 

5,S6o 
7  06  1 

$  7-4 
16  6 

IQIO 

11    847 

1  1    4OO 

127    l^O 

06    O12    7OO 

1  1  870 

o  8 

IQII 

30,620 

II    203 

10s;  126 

io<?  480  600 

9844 

•21     O 

1912     . 

48,  ^20 

11,157 

12O    157 

88  190  800 

IO   215 

I*     O 

I9J3  
1914  

57,489 

59  ,  660 

10,867 

9,  161 

320,889 
2QO.404- 

89,150,200 

82,947,200 

19,173 
20,211 

13-7 
8.6 

IQIS  
I9l6     . 

56,882 

6O,  ^2O 

10,340 

IO   277 

318,011 

127    406 

97,301,480 

112   8^*!    I  ^O 

12,705 
12    017 

3-2 
0    I 

1917  

^4,677 

4.0l8 

161  608 

64.  244  i  <co 

6,062 

IT     O 

1918  

46,883 

2,  520 

85.610 

34,  701  ,8<;o 

2,010 

2   4 

*  Chicago  Daily  News  Almanac. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          223 

Again  he  said: 

Another  upward  movement  in  the  early  nineties  carried  values  some  ten  years 
ahead  of  real  conditions.  The  city  began  rapidly  to  overtake  these  values  while  the 
values  themselves  began  to  fall  back  to  meet  real  conditions.  This  process  has  gone 
on  now  for  fifteen  years.  Since  the  World's  Fair  a  new  city  has  been  added  to  each 
of  the  three  sides  of  the  river,  wealth  has  accumulated,  public  improvements  have 
been  made,  every  token  which  goes  to  make  a  great  metropolis  has  come  into  evi- 
dence, but  the  real  estate  pendulum  has  only  begun  to  swing  upward.6? 

William  B.  Harmon  explained  the  process  in  these  words: 
Land  values  as  distinguished  from  land  prices  grow  almost  exactly  as  population 
increases,  for  they  are  determined  by  the  economic  returns  in  rents  when  improved, 
while  real  estate  prices  are  not  determined  by  intrinsic  values,  but  largely  by  senti- 
ment, so  that  prices  and  values  do  not  necessarily,  in  fact,  rarely  mean  the  same 
thing.  In  1889  everybody  thought  real  estate  prices  would  never  stop  going  up, 
while  now  they  are  just  as  firmly  convinced  that  they  will  never  stop  going  down, 
and  the  facts  in  the  case  are  that  prices  are  actually  beginning  to  recover,  although 
within  the  past  month  we  have  bought  real  estate  in  your  city  at  about  one-half  of 
what  we  would  have  paid  for  property  with  equal  facilities  in  transportation  and 
city  improvements  twenty  years  ago.  Now  economic  realty  values  are  way  above 
the  prevailing  market.  A  lot  of  land  in  Chicago,  properly  improved,  will  return  a 
net  income  double  the  amount  of  the  income  from  property  of  equal  cost  in  New 
York,  Boston  or  the  average  American  city.  Conditions  which  apply  in  one  part  of 
the  country  do  not  apply  in  another.  Real  estate  booms  are  local  and  reactions 
from  booms  are  local.  Land  may  be  on  a  speculative  basis  in  one  city  and  far  below 
its  intrinsic  value  in  another.  Chicago  has  now  entirely  recovered  from  the  wild 
speculation  of  the  early  nineties,  and  if  nothing  whatever  was  done  to  attract  at- 
tention to  real  estate  in  your  city,  a  buying  movement  would  soon  set  in  of  its  own 
accord  which  would  bring  about  a  renewed  period  of  real  estate  activity.68 

There  were,  of  course,  a  few  bright  spots  in  this  dark  picture.  Michi- 
gan Avenue  from  Randolph  Street  to  Roosevelt  Road  took  on  a  new 
aspect  in  the  summer  and  fall  of  1909  with  the  completion  of  the  Black- 
stone  Hotel,  the  McCormick  Building,  the  People's  Gas  Building,  and 
the  Harvester  Building.69  Southward,  on  Michigan  Avenue,  the  auto- 
mobile center  was  growing  fast.  Land  values  had  doubled  in  the  five 
years  ending  in  1909  along  the  line  of  the  Northwestern  elevated  road 
from  Wilson  Avenue  to  Evanston.70  Business  corners  in  outlying 
neighborhoods  such  as  Sixty-third  and  Halsted  streets  were  reaching 
higher  peaks  than  ever  before.  Office  buildings  were  crowded  to  capac- 
ity. The  West  Side  land  near  Madison  and  Halsted  had  reached  the 

67  Ibid.,  July  24,  1909.  ^  Ibid.,  November  27,  1909. 

68  Ibid.,  April  24,  1909.  70  ibid.,  March  13,  1909. 


224 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


highest  values  in  its  history.  Twenty-five  houses  had  been  built  in  the 
Kenwood  district  in  four  years.  Factories  continued  to  expand  in  the 
Calumet  region.  Such  was  the  view  in  1909. 

Central  business  district. — By  1910  there  was  a  lull  in  transactions  in 
retail  property  in  the  Loop,  the  asking  prices  based  upon  leasing  valua- 
tions being  regarded  as  too  high.71  The  rise  in  the  interest  rate  from  4 
to  4^  per  cent  on  downtown  fees  also  tended  to  lower  valuations  based 
on  4  per  cent  capitalization  rate.  Rents  for  stores  and  offices  were  con- 
tinuing to  rise,  however. 

TABLE  XIII* 

VALUE  OF  NEW  OFFICE  BUILDINGS  ERECTED  ANNUALLY  IN 

CHICAGO  COMPARED  WITH  TOTAL  NEW 

CONSTRUCTION,  1908-15 


Year 

No. 

Cost 

Per  Cent 
Total  New 
Construc- 
tion 

Value  of 
Property 
Long  Leases 

1908  

$  7  400  ooo 

I  909  .  . 

i  6  600  ooo 

1910  

4.C 

$16,461  ,500 

17  O 

9  800  ooo 

1911  

48 

23,  101  ,000 

21    0 

3  i  ooo  ooo 

IQI2 

4.Q 

4t?7i    OOO 

ST 

i  <5  ooo  ooo 

1913  
1914 

76 

72 

2  ,  706  ,  400 
2    <?  2O   4OO 

3-o 
30 

13,000,000 
8  649  800 

IQIS  

45 

4,2OO,OOO 

4-4 

3,230,000 

*  Economist,  June  3,  1016.  The  value  of  new  construction  as  shown  by  permits  from  the 
records  of  the  City  Building  Department  of  Chicago. 

In  1910  and  1911  there  was  a  wave  of  office  building  in  the  Loop, 
which  reached  larger  proportions  than  the  skyscraper  boom  from  1890 
to  1892.  From  1909  to  1914,  inclusive,  property  of  a  value  of  over 
$94,000,000  was  placed  under  long-term  leases,  a  considerable  part  of 
which  was  due  to  office-building  activity.  Table  XIII  shows  the  extent 
of  these  operations  which  fell  off  greatly  after  191 1.72 

The  rush  to  erect  office  buildings  in  1911  was  partly  due  to  an  ordi- 
nance passed  in  January  limiting  the  height  of  buildings  to  200  feet 
after  September  i.73  The  result  of  this  office-building  boom  was  to 
create  another  oversupply  of  space,  and  there  were  many  vacant  offices 
by  the  spring  of 


71  Ibid.,  July  2,  1910. 

72  Ibid.,  June  3,  1916. 


73  Ibid.,  January  7,  1911. 
"M  Ibid.,  April  19,  1913. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR         225 

Land  values  on  some  of  the  streets  that  hitherto  had  been  outside  the 
main  retail  district  reached  peaks  far  exceeding  the  prices  of  1890. 
Thus  on  Michigan  Avenue  at  Congress  Street  was  a  lot  under  the  Audi- 
torium Hotel  that  had  been  leased  on  a  basis  of  $1,150  a  front  foot  in 
1886  that  was  leased  for  $15,000  a  front  foot  in  iQi6.7S  Frontage  on 
Wabash  Avenue  south  of  Madison  Street  that  sold  for  $5,000  a  front 
foot  in  1899  was  valued  at  $11,000  a  front  foot  in  191 2.76  The  south- 
ward trend  of  business  had  become  so  pronounced  in  1911  that  frontage 
on  State  Street  south  of  Van  Buren  sold  for  $7,300  a  front  foot.77  The 
corner  of  State  and  Madison  Street  itself  was  valued  at  $300  a  square 
foot  in  1912,  or  over  three  times  its  value  in  iSgo.78 

South  Water  Street  continued  to  be  the  congested  produce  market 
with  154  firms  between  State  and  Lake  Street  requiring  800  teams  to 
do  their  hauling,  but  there  were  several  plans  for  a  removal  of  this 
market  to  a  new  locality.79  Plans  for  the  widening  of  Roosevelt  Road, 
for  the  new  Field  Museum,  and  for  the  Michigan  Avenue  link  bridge 
were  being  discussed  in  1915  and  1916,  but  the  war  intervened  before 
they  were  started. 

The  elevated  lines  were  consolidated  in  1911,  and  continued  with  the 
surface  lines  to  pour  a  heavy  volume  of  shoppers  into  the  stores  on 
State  Street.  In  1911  it  was  estimated  that  1,350,000  passengers  went 
in  and  out  of  the  Loop  daily  on  the  surface  and  elevated  lines,  1,000,000 
of  these  riding  on  the  surface  lines.80 

Outlying  business  centers. — At  this  time  outlying  transfer  corners,  or 
points  where  street-car  lines  intersected,  came  into  prominence.  A 
movement  away  from  the  retail  stores  in  the  central  business  district 
was  inaugurated  by  the  development  of  a  new  automobile  center  on 
Michigan  Avenue  south  of  Twenty-second  Street  where  by  1911  there 
were  twenty-six  automobile  showrooms  between  Twenty-second  and 
Twenty-fifth  streets.81  Lots  on  Michigan  Avenue  near  Twenty-second 
Street  advanced  from  $200  a  front  foot  in  1907  to  $2,000  a  front  foot  in 
1910  as  a  result.82 

Of  greater  significance  than  this  overflow  from  the  Loop  southward 
was  the  establishment  of  new  community  centers  at  points  where 

nibid.,  August  19,  1916.  nibid.,  February  27,  1915. 

76  Ibid.,  March  16,  1912.  **  Ibid.,  January  7,  1911. 

77  Ibid.,  October  14,  1911.  8l  Ibid.,  January  7,  1911. 
i*Ibid.,  April  6,  1912.  8a  Ibid.,  July  2,  1910. 


226  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

street-car  lines  intersected  or  near  elevated  railway  stations.  Several 
factors  contributed  to  the  establishment  of  many  small  business  centers 
outside  the  central  nucleus  in  the  Loop.  The  first  was  the  movement 
on  the  part  of  chain  stores  to  seek  retail  outlets  near  where  the  con- 
sumers lived.  Forty  outlying  stores  could  be  rented  at  the  same  cost 
as  one  store  on  State  Street.  In  1910  the  Columbia  drug  stores  leased 
twenty-five  transfer  corners,  which  of  course  commanded  a  higher 
rental  than  the  ordinary  neighborhood  store.83  The  Atlantic  and 
Pacific  Tea  Company,  the  United  Cigar  Store,  and  other  chain  organ- 
izations also  began  to  establish  stores  in  every  neighborhood.  The  second 
factor  was  the  building  of  theaters  outside  the  Loop.  At  first  vaude- 
ville houses,  whose  performances  were  inferior  to  the  Loop  theaters, 
and  then  showings  of  moving  pictures  that  were  the  same  as  those 
displayed  downtown  induced  people  to  seek  their  entertainment  near 
their  homes.  The  third  factor  was  the  growth  of  neighborhood  banks. 
Prior  to  the  World's  Fair  there  had  been  only  one  bank  outside  the 
Loop,  that  at  the  Stock  Yards,  but  at  this  time  many  banks  were  or- 
ganized to  do  business  in  the  new  community  centers.  The  fourth  fac- 
tor was  the  moving  of  manufacturing  plants  and  wholesale  houses 
away  from  the  downtown  area,  with  the  result  that  new  communities 
formed  near  them.  Even  when  the  factories  or  plants  did  not  move, 
as  in  the  case  of  the  Stock  Yards,  the  higher  class  of  employees  sought 
to  get  away  from  the  noise  and  odors  of  the  industrial  district  as  well 
as  from  the  old  neighborhoods  occupied  by  unskilled  laborers  of  the 
new  immigration  or  of  the  colored  race.  The  fifth  factor  was  the  charac- 
ter of  the  transportation  system.  As  the  population  moved  farther  out 
and  away  from  the  railroads  and  elevated  lines,  more  reliance  was 
placed  upon  the  surface  cars.  While  these  street  cars  were  adequate  to 
carry  people  to  and  from  outlying  factories  and  neighborhood  centers, 
they  were  a  slow  medium  for  reaching  the  Loop.  Thus,  as  a  result  of  a 
drift  of  population  away  from  the  downtown  area,  neighborhood  cen- 
ters with  their  own  stores,  banks,  and  theaters  began  to  develop  at  this 
time.  Within  another  decade  the  movement  reached  its  apex. 

The  growth  of  these  community  business  centers  was  reflected  in  the 
rise  of  land  values  at  transfer  corners.  The  corner  of  Sixty- third  and 
Cottage  Grove  Avenue,  valued  at  no  more  than  $400  a  front  foot  at  the 
peak  of  the  World's  Fair  boom,  was  sold  for  $640  a  front  foot  in  1906 

83  Ibid.,  June  n,  1910. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          227 

and  leased  for  $1,400  a  front  foot  in  1909,  and  for  $3,398  a  front  foot  in 
I9i2.84  The  corner  of  Sixty-  third  and  Halsted  Street  was  leased  for 
$2,873  a  front  foot  in  i9i38s  as  compared  with  $1,754  a  front  foot  in 
i9io.86  The  corner  of  Lawrence  and  Kimball  increased  in  value  from 
$52  to  $300  a  front  foot  from  1909  to  1912,  and  by  1918  it  sold  for 
$606  a  front  foot.87  Triple  intersections  along  Milwaukee  Avenue  ac- 
quired a  high  value.  The  corner  of  Lincoln,  Robey,  and  Irving  Park, 
bought  for  $25  a  front  foot  in  1904,  was  leased  for  $900  a  front  foot  in 
191  2.88  The  corner  of  Milwaukee,  Western,  and  Armitage  was  leased  for 
$9.00  a  square  foot  in  i9io.89  Corners  beyond  the  settled  area,  if  at 
the  intersection  of  two  actual  or  potential  car  lines,  began  to  ac- 
quire a  speculative  value.  The  corner  of  Sixty-third  and  Western 
Avenue  was  sold  for  $282  a  front  foot  in  i9ii.9°  The  corner  of  Sixty- 
third  and  Kedzie  Avenue  sold  for  $400  a  front  foot  in  i9i3-91  At 
the  same  time  the  corner  of  Devon  and  Western  was  bought  for  $177  a 
front  foot  and  that  of  Belmont  and  Cicero  for  $50  a  front  foot,  both 
representing  great  advances  over  previous  acre  values.92  The  corner  of 
Madison  and  Crawford  was  leased  for  $972  a  front  foot  in  i9i3-93  The 
corner  of  Lawrence  and  Kedzie  rose  in  value  from  $53  a  front  foot  in 
1911  to  $433  a  front  foot  in  i9i5.94  Lincoln  Avenue  between  Leland 
and  Lawrence  increased  from  $100  a  front  foot  in  1909  to  $1,000  a 
front  foot  in  1915.  9S  Seventy-ninth  and  Halsted  corner  advanced  from 
$530  a  front  foot  in  1911  to  $924  in  1912.  The  first  fervor  of  transfer 
corner  speculation  began  to  abate  in  1913  and  it  was  not  renewed  gen- 
erally until  after  1919. 

Growth  of  new  neighborhoods.  —  New  neighborhoods  were  being  built 
in  all  sections  of  the  city.  The  Washington  Park  race  track,  from  Sixty- 
first  to  Sixty-third  streets,  Cottage  Grove  to  South  Park  Avenue,  closed 
as  a  result  of  the  anti-betting  law  of  1905,  was  subdivided  and  built  up 
almost  solidly  from  1908  to  1912.  96  Near  Seventy-ninth  and  Racine  150 
new  houses  had  been  built  from  1906  to  19  io.97  In  Avalon  highlands, 


id.,  April  3,  1909;  December  31,  1912.  9I  Ibid.,  October  n,  1913. 

85  Ibid.,  April  19,  1913.  92  Ibid.,  November  8,  1913. 

86  Ibid.,  July  9,  1910.  M  Ibid.,  September  20,  1913. 

87  Ibid.,  April  6,  1912;  April  20,  1918.  9*  Ibid.,  January  2,  1915. 

88  Ibid.,  July  6,  1912.  9S  Ibid.,  April  17,  1915. 

89  Ibid.,  November  19,  1910.  *  Ibid.,  February  i,  1913. 

90  Ibid.,  October  14,  1911.  w  Ibid.,  November  19,  1910. 


228  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

southeast  of  Seventy-ninth  and  Cottage  Grove  Avenue,  150  houses  had 
been  built  from  1911  to  1915. 98  In  1915  a  new  city  was  being  built  south 
of  Jackson  Park  east  of  Stony  Island  Avenue."  The  region  near  Archer 
and  Kedzie  was  being  settled  in  1914  as  a  result  of  the  establishment  of 
the  Crane  plant  near  there,100  and  land  values  tripled  in  the  two  years 
from  1913  to  191 5.101  A  new  residence  section  was  being  developed  north 
of  Diversey  to  Belmont  on  the  Lake  Shore  Drive  in  191 5-102  The  entire 
North  and  Northwest  sides  were  growing  fast.  The  relatively  rapid 
growth  in  the  outer  zone  of  the  city  from  1906  to  1916  is  shown  by  the 
increase  in  the  number  of  telephones.  While  the  number  in  the  Loop 
increased  from  33,000  to  83,000  and  in  the  inner  zone  from  27,659  to 
54,538,  the  number  in  the  outer  zone  rose  from  50,240  to  274,147.  The 
increase  was  greatest  in  Irving  Park,  Rogers  Park,  and  Edgewater, 
with  advances  of  907,  346,  and  343  per  cent,  respectively.103  In  the  pe- 
riod from  1910  to  1916,  while  the  population  within  the  first  four  miles 
of  the  corner  of  State  and  Madison  Street  remained  almost  stationary 
at  slightly  more  than  1,000,000,  the  population  from  four  to  seven 
miles  from  this  center  increased  from  460,000  to  1,076,000.  In  the 
same  interval  the  population  in  the  belt  from  seven  to  ten  miles  from 
the  center  increased  from  180,000  to  332,ooo.104 

Acre  and  subdivision  activity. — In  the  beginning  of  this  period,  sub- 
division activity,  notwithstanding  the  doubling  in  the  population  of  the 
city  from  1890  to  1910,  had  not  recovered  from  the  aftermath  of  1890. 
In  1910  sales  of  acre  tracts  on  the  South  Side  were  made  at  prices  far 
below  the  levels  of  1890.  The  accompanying  tabulation  shows  the 
level  of  values  in  1910,  with  the  corresponding  values  for  1890. 

1910  1890 

Devon-Western $800  an  acre  $i  ,000 

Sixty-third-Cicero 600  2,000 

Seventy-ninth-Racine ....     900  3 , 500 

Belmont-Laramie 550  750 

Forty-seventh-Crawford.  .     350  2,000 

The  very  fact  that  sales  were  made  indicated  an  awakening  of  activ- 
ity. Acre  tracts  on  the  North  Side  began  to  advance  in  value.  By  1913 
land  at  Devon  and  Kedzie  sold  for  $3,125  an  acre,  an  advance  of  300 

<*  Ibid.,  April  3,  1915.  10X  Ibid.,  March  27,  1915. 

» Ibid,  (annual  review),  1915.  ™  Ibid.,  February  6,  1915. 

100  Ibid.,  November  28,  1914.  103  Ibid.,  April  6,  1916. 

IO-»  Report  of  the  Chicago  Traction  and  Subway  Commission  (1916),  p.  73. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          229 

per  cent  in  three  years.105  Elston  Avenue  south  of  Diversey  had  sold 
for  $5,000  an  acre  in  1897,  but  it  brought  $21,000  an  acre  in  I9i2.106 
Subdivision  activity  increased.  Frederick  H.  Bartlett  bought  1,727  acres 
in  the  Clearing  district  in  1910  for  $500  an  acre,107  and  in  this  tract  he 
sold  800  lots  for  $100,000  in  one  day.108  Lots  were  being  sold  at  Sixty- 
third  and  Western  Avenue,  sales  of  $300,000  being  made  in  a  short 
time  during  i9i2.109  In  1914  lots  were  being  sold  south  of  Jackson 
Park,  at  Seventy-ninth  and  Cottage  Grove,  at  Archer  and  Kedzie 
avenues,  and  on  the  Northwest  Side.  In  the  fall  of  1914,  at  the  south- 
west corner  of  Seventy-ninth  and  Cottage  Grove  in  the  new  subdivision 
called  " Chatham  Fields,"  894  lots  out  of  a  total  of  1,146  were  sold  in 
five  weeks  for  $994,000."°  Subdivision  activity  declined  after  1914,  but 
in  1917  Frederick  H.  Bartlett  sold  2,694  out  of  2,994  lots  in  "Greater 
Chicago"  at  One  Hundred  and  Third  Street  and  the  Illinois  Central 
Railroad,  and  he  reported  total  sales  for  the  year  of  over  $6,ooo,ooo.IXI 
William  Britigan  sold  2,629  lots  of  a  value  of  $4,187,621  in  1917,  but 
to  make  these  sales  it  was  necessary  for  his  53  employees  to  make 
169,456  telephone  calls,  to  make  5,000  automobile  trips,  and  to  use 
1,399,835  pieces  of  advertising."2  The  automobile,  the  telephone,  and 
widespread  advertising  were  means  now  used  by  trained  sales  organiza- 
tions to  sell  lots.  Only  a  few  large  firms  were  successful  in  stimulating 
an  interest  in  buying  lots,  and  even  their  efforts  were  almost  suspended 
by  the  outbreak  of  war.  Prior  to  1918  speculation  in  lots  and  acre  tracts 
had  only  a  mild  revival  that  was  not  comparable  as  a  whole  to  the  ac- 
tivity in  1890.  There  had,  however,  been  slow  and  persistent  gains 
year  after  year  on  the  North  Side  since  1900  and  spectacular  rises  in 
values  at  transfer  corners. 

Fashionable  residential  areas. — The  ultra-fashionable  residential  area 
was  extending  northward  along  the  Lake  Shore  Drive  from  Diversey  to 
Belmont  Avenue  in  1915.  The  Lake  Shore  Drive  near  Division  Street 
had  reached  values  of  over  $2,000  a  front  foot,  and  the  spread  of  fine 
homes  to  As  tor  Street  had  raised  its  values  in  a  few  years  from  $200  to 
over  $1,000  a  front  foot."3 

105  Economist,  January  22,  1910. 

106  Ibid.,  May  14,  1910.  "°  Ibid.,  September  19,  1914. 

107  Ibid.,  September  3,  1910.  IZI  Ibid.,  February  2,  1918. 

108  Ibid.,  June  28,  1910.  lu  Ibid.,  January  5,  1918. 

109  Ibid.,  June  22,  1912.  "*  Ibid.,  November  14,  1914. 


230  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

Meanwhile,  the  old  mansions  on  Prairie  Avenue  continued  to  be  sold 
at  a  fraction  of  their  original  cost.  A  house  near  Eighteenth  and 
Prairie  Avenue  that  cost  $200,000  was  sold  with  81  feet  of  ground  for 
$25,000.  A  home  at  Twenty- third  and  Calumet  Avenue  that  cost 
$150,000  and  was  the  finest  in  the  city  in  1870  was  sold  with  120  feet 
of  ground  for  $36,000.  This  was  in  ipog."4  The  old  homes  on  Ashland 
Boulevard  on  the  West  Side  met  the  same  fate.  These  commodious 
houses  were  too  large  to  be  maintained  when  the  servant  problem  be- 
came acute,  and  it  was  becoming  the  fashion  to  live  in  apartments  and 
not  to  imitate  the  castles  of  the  feudal  barons. 

Old  residential  areas. — Old  houses  near  the  Loop  were  used  for  board- 
ing-houses or  torn  down  to  make  way  for  warehouses.  The  old  "red 
light"  district  at  Twenty-second  and  State  Street  was  abolished  in  1912, 
and  with  it  went  the  exceptionally  high  rents  paid  for  the  use  of  the 
property  for  immoral  purposes.  The  expansion  of  warehouses  soon 
gave  it  a  prospective  commercial  value  as  high  as  that  for  the  old  use, 
however. 

Manufacturing  and  warehouse  districts. — Manufacturing  districts 
were  growing  and  increasing  in  value  in  this  period.  The  land  in  the 
Central  Manufacturing  District  bought  for  $900,000  in  1900  was  valued 
at  $15,000,000  in  I9i5."s  The  Clearing  district,  where  the  railroad 
transfer  yards  saved  a  day  getting  freight  in  and  out  of  Chicago,  was 
acquiring  new  factories.  The  Crane  plant  moved  from  Roosevelt  and 
Canal  streets  to  Kedzie  near  Thirty-ninth  Street  in  191 2, II6  and  as  it 
gave  employment  to  fifty-seven  hundred  men,  it  created  a  new  settle- 
ment in  that  prairie  region.  The  Kenwood  manufacturing  district  was 
established  at  Forty-seventh  and  Kedzie  Avenue.  The  industries  of 
the  Calumet  region  and  of  South  Chicago  continued  to  grow  as  the 
traffic  on  the  Calumet  River  became  the  main  stream  of  water-borne 
commerce  entering  Chicago  by  1916.  Iron,  steel,  chemicals,  beds,  ce- 
ments, tile,  railroad  equipment,  musical  instruments,  corn  products, 
spirits,  oil,  and  food  products  were  all  manufactured  there. 

Apartments. — Apartment  building  was  the  leading  type  of  new  con- 
struction in  1915,  as  Table  XIV  shows.  As  a  result  of  this  extensive 
building  of  apartments,  thirty  thousand  houses  and  apartments  were 
reported  vacant  in  i9i2,"7  and  apartment  rents  declined  in  1913.  Nev- 

.,  November  20,  1909.  Il6  Ibid.,  November  23,  1912. 

.,  April  24,  1915.  "7  Ibid.,  September  13,  1913. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR 


231 


ertheless,  a  new  peak  of  apartment  building  was  reached  in  1915  when 
apartments  with  sun  parlors  became  the  vogue.  The  one-room  apart- 
ment made  its  debut  in  the  Wilson  Avenue  district  in  191 6."8 

Review  of  the  market  as  a  whole,  1908-18. — In  1910,  notwithstanding 
record  high  values  in  the  Loop,  at  Michigan  Avenue  near  Twenty-sec- 
ond Street,  along  the  North  Shore,  and  at  certain  street-car  intersec- 
tions, the  prices  of  outlying  acre  tracts  were  lower  than  they  were 
twenty  years  before.  A  large  volume  of  property  sold  at  bankruptcy 

TABLE  XIV* 

NUMBER  AND  COST  OF  NEW  APARTMENT  BUILDINGS  COMPARED 

WITH  NEW  SINGLE-FAMILY  RESIDENCES  CONSTRUCTED 

IN  CHICAGO,  1910-15 


YEAR 

APARTMENT  BUILDINGS 

SINGLE-FAMILY 
RESIDENCES 

No. 

Cost 

Per  Cent 
Total 
Construction 

Cost 

Per  Cent 
Total 
Construction 

IQIO 

4,362 
4,599 
4,767 
5,034 
4,729 
4,47° 

$34,372,500 
36,401,000 
43,619,000 
39,565,800 
40,632,000 
59,567,750 

34-4 
34-8 
49-0 
44.0 
48.8 
61.2 

$  8,379,300 
8,535,500 
8,198,000 
9,159,500 
10,862,500 
10,500,000 

8-5 
8.0 

9-3 

IO.2 
12.0 

10.8 

IQI  I 

IQI2 

IQI3 

IOI4.  . 

IQIC  

*  Economist,  June  3,  1916.  From  records  of  the  Building  Department  of  Chicago. 

and  foreclosure  sales  could  still  be  bought  at  bargain  prices.  High  office 
rents  stimulated  a  large  volume  of  new  construction  in  the  Loop  in 
1910  and  1911.  Apartment  construction  continued  in  large  volume 
from  1910  to  1916,  although  there  were  many  vacant  apartments  in 
1916.  Transfer  corners  rose  sharply  in  value  from  1909  to  1913,  when 
the  movement  slackened  for  the  time  being.  From  1911  to  1917  sub- 
division activity  revived  to  a  moderate  extent.  Land  south  of  Jackson 
Park  began  to  rise  in  value  after  1915,  and  throughout  this  period  there 
was  a  steady  gain  in  land  values  north  and  northwest.  From  1910  to 
1918  the  average  land  values  of  Chicago  rose  50  per  cent,"9  but  there 
was  nothing  resembling  a  boom.  After  1916  rents  remained  stationary 

Il*Ibid.,  April  i,  1916. 

"» Herbert  D.  Simpson,  The  Influence  of  Public  Improvements  on  Land  Values,  Annals 
of  American  Academy  (March,  1930),  p.  128. 


232  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

while  operating  costs  advanced  with  prices.   The  outbreak  of  war  re- 
duced building  activities  to  a  low  ebb. 

C.     THE  PERIOD  FROM  IQIQ  TO  1933 

Survey  of  the  general  factors  affecting  urban  land  in  the  United  States, 
1919-26. — In  each  of  the  preceding  chapters  of  this  study  there  was  pre- 
sented a  spectacle  of  an  exuberant  and  rapid  rise  of  land  values  during 
which  the  energies  and  hopes  of  the  entire  population  of  the  city  were 
raised  to  the  highest  pitch,  followed  by  the  painful  decline  in  the  same 
values  that  checked  this  ardent  activity  and  brought  disillusionment 
and  despair  to  great  masses  of  people  in  Chicago.  The  newly  created 
wealth  in  the  form  of  higher  land  values,  which  seemed  so  solid  and 
substantial  when  it  was  buttressed  by  bank  loans  and  when  it  was 
readily  convertible  into  cash,  was  seen  first  to  lose  its  liquidity  and 
then  much  of  its  value  in  each  of  these  successive  land  cycles  of  the  past. 
As  a  result  of  the  continued  remarkable  growth  of  the  metropolis  by 
the  lake,  a  recovery  in  the  real  estate  market  after  every  depression 
carried  land  values  as  a  whole  to  higher  peaks  with  each  successive 
boom  and  caused  later  generations  to  overlook  the  preceding  valleys  in 
which  their  fathers  and  grandfathers  had  floundered.  In  this  last  peri- 
od, the  facts  as  to  the  rise  and  fall  of  Chicago  land  values  since  the  end 
of  the  World  War  are  still  too  recent  to  be  forgotten.  Those  who  have 
witnessed  the  fifth  act  of  this  century-long  drama  almost  doubt  the 
evidence  of  their  senses.  It  seems  impossible  that  such  changes  could 
have  occurred  in  so  short  a  time,  and  if  people  had  not  seen  with  their 
own  eyes  what  has  occurred,  they  would  not  have  believed  it. 

The  United  States  has  just  passed  through  a  period  similar  in  many 
respects  to  that  " gilded  age"  following  the  Civil  War.  There  was  that 
same  striving  for  sudden  wealth  on  the  part  of  the  masses  of  the  people, 
and  that  same  financial  manipulation  on  a  grand  scale  by  men  like 
Krueger  and  Insull.  Men  were  dazzled  by  the  rising  skyscrapers  and 
the  new  comforts  of  living.  It  seemed  to  be  a  new  era  in  which  poverty 
in  the  United  States  was  to  be  forever  banished.  Then  the  whole  struc- 
ture toppled  down  like  a  house  of  cards,  and  today  we  look  back  on  it 
as  a  bubble  or  a  mirage. 

Wealth  in  the  form  of  land  or  buildings  which  seemingly  rests  on  so 
secure  a  physical  foundation  in  fact  depends  on  the  ability  of  landlords 
to  maintain  gross  rents  above  operating  costs  for  long  periods  in  the 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          233 

future.  When  a  combination  of  circumstances  increases  the  net  income 
of  landlords  for  a  short  time,  however,  people  seem  always  to  proceed 
immediately  to  the  conclusion  that  this  profitable  situation  will  endure 
for  years  to  come.  Land  values  are  capitalized  not  merely  on  the  new 
basis,  but  even  on  the  assumption  that  the  profit  margin  of  landlords 
will  continue  to  increase.  Taxes  are  levied,  bank  loans  are  made,  and 
long-time  commitments  are  entered  into  on  this  new  basis,  until  the 
whole  financial  structure  of  society  is  involved  in  the  support  of  the 
newly  created  land  values.  This  situation  is  brought  about  not  merely 
because  of  the  increase  of  the  spread  between  gross  rents  and  operating 
costs  which  makes  land  at  least  temporarily  a  profitable  investment, 
but  also  because  of  the  pressure  of  funds  seeking  investment.  When  the 
banks  are  able  to  expand  their  loans  with  ease  and  wage-earners  are  ac- 
cumulating surplus  funds  in  large  volume,  if  opportunities  for  employ- 
ment of  such  savings  do  not  exist,  they  tend  to  be  created.  Instead  of 
the  rate  of  interest  being  forced  down  by  the  large  supply  of  capital,  it 
is  sustained  by  the  manufacture  of  new  enterprises  which  appear  to  be 
much  safer  than  they  really  are.  Money  that  was  ostensibly  being 
poured  out  for  investment  purposes  with  the  expectation  of  an  annual 
interest  payment  was  used  to  pay  wages,  financing  costs,  commissions, 
brokers'  fees,  etc.,  on  so  high  a  basis  that  future  rents  could  not  possibly 
be  high  enough  to  yield  a  return  on  this  inflated  load  of  costs. 

The  fortuitous  circumstances  that  operated  to  raise  and  lower  the 
value  of  urban  and  rural  land  in  the  United  States  since  the  beginning 
of  the  World  War  will  now  be  described.  Land,  together  with  the  build- 
ings upon  it,  represented  in  1922  over  one-half  of  our  total  national 
wealth.120  Therefore  the  fluctuations  in  so  important  a  species  of  prop- 
erty could  not  fail  to  affect  our  entire  financial  and  industrial  structure. 

Urban  land  in  the  United  States  was  generally  depressed  during  the 
World  War.  The  depression  of  1914  had  slowed  down  a  mild  revival  in 
Chicago  real  estate  and  had  cut  short  land  booms  in  the  cities  of  the 
Canadian  Northwest  and  in  New  York  City.  The  war  turned  world- 
demand  away  from  housing  to  the  production  of  munitions  and  food- 
stuffs to  supply  the  armies  in  the  field.  While  the  prices  of  American 
farm  products  more  than  doubled  from  1914  to  1918,  average  house 
rents  in  the  United  States  rose  only  9  per  cent.  The  result  was  that 
the  value  of  American  farm  land,  which  had  doubled  from  1900  to  1910 

120  U.S.  Census  of  Wealth,  Debt  and  Taxation  (1922). 


234  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

as  a  result  of  slowly  rising  prices  of  agricultural  products,  doubled 
again  from  1910  to  1920,  reaching  a  total  value  in  the  latter  year  of 
$55,ooo,ooo,ooo.121  In  Iowa,  in  the  heart  of  the  corn  belt,  the  boom  in 
farm  lands  carried  sales  prices  to  $500  an  acre  by  1920. 

Then  came  the  remarkable  reversal  in  the  relative  position  of  urban 
and  rural  real  estate.  Whereas  in  1920  all  the  urban  land  in  cities  over 
30,000  in  the  United  States  had  a  value  of  scarcely  over  $25,000,000,- 
ooo,  or  half  that  of  the  value  of  farm  land,  by  1926  the  value  of  all  farm 
land  had  dropped  from  $55,000,000,000  to  $37,000,000,000,  while  the 
value  of  urban  land  in  American  cities  over  30,000  population  had  risen 
from  $25,000,000,000  to  over  $50,000,000,000.  The  area  of  land  within 
these  cities  was  only  one-fifth  of  i  per  cent  of  all  the  land  in  the  United 
States,  and  yet  it  was  valued  in  1926  at  33  per  cent  more  than  that  of 
all  the  farm  land  in  the  United  States,  whose  area  was  two  hundred 
times  as  great.122  The  cause  of  this  great  shift  was  due  to  a  double  set 
of  forces,  one  acting  to  depress  the  value  of  farm  lands  and  the  other  to 
elevate  the  value  of  urban  lands. 

American  agriculture  and  American  farm-land  values  were  depressed 
as  a  result  of  the  disappearance  of  the  extraordinary  combination  of 
factors,  behind  the  war-time  demand  for  American  foodstuffs.  Austral- 
ian wheat,  mainly  unavailable  during  the  war  because  of  the  long  route 

121  U.S.  Census  (1910,  1920). 

122  The  value  of  urban  lands  within  the  corporate  limits  of  cities  of  30,000  population 
and  over  in  the  United  States  is  an  approximation  computed  by  the  writer  by  two  inde- 
pendent methods.  The  first  method  is  based  on  per  capita  land  values.  Zangerle  found  that 
the  average  per  capita  land  value  in  nine  cities  in  1921  was  $756  (John  A.  Zangerle,  Prin- 
ciples of  Real  Estate  Appraising  [Cleveland,  1924],  p.  229).  These  nine  cities  were  New 
York,  Boston,  Pittsburgh,  Cleveland,  San  Francisco,  Cincinnati,  Baltimore,  Milwaukee, 
and  Detroit.  The  population  of  all  American  cities  over  30,000  in  1920  was  36,705,911. 
Applying  the  average  per  capita  land  value  in  the  nine  cities  to  the  entire  urban  population 
would  give  a  total  urban  land  value  of  $27,750,000,000.  It  may  be  objected  to  this  method 
that  per  capita  land  values  are  higher  in  the  larger  than  in  the  smaller  cities,  and  that  ap- 
plying the  average  for  these  large  cities  to  the  smaller  ones  would  result  in  too  high  a  figure. 
It  will  be  observed,  however,  that  some  very  large  cities  were  not  included  in  the  nine  cities 
taken  by  Zangerle,  and  that  Chicago,  Philadelphia,  Los  Angeles,  St.  Louis,  New  Orleans, 
Minneapolis,  St.  Paul,  Kansas  City,  Atlanta,  Washington  (D.C.),  Seattle,  Portland  (Ore.), 
Columbus,  Toledo,  Louisville,  Newark,  Jersey  City,  Indianapolis,  Akron,  Denver,  Bir- 
mingham, and  many  other  large  cities  were  omitted.  The  twenty-one  cities  specifically 
mentioned  that  were  omitted  had  a  population  of  approximately  10,800,000  in  1920,  or 
about  the  same  population  as  the  nine  cities  taken  by  Zangerle. 

To  check  this  method  another  one  is  employed.  The  U.S.  Federal  Trade  Commission 
in  their  estimate  of  the  national  wealth  in  1922  do  not  give  a  separate  estimate  for  urban 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          235 

through  the  submarine  zone,  and  Argentine  wheat,  withheld  for  lack  of 
ships,  were  again  poured  into  the  markets  of  Europe.  Continental 
European  countries,  with  the  war  veterans  back  on  the  farms,  needed  to 
import  less.  It  was  discovered  that  large  surplus  stocks  of  many  com- 
modities were  piled  up  in  warehouses  at  the  close  of  the  war,  and  there 
was  a  sudden  and  sharp  decline  of  commodity  prices  in  1920.  The  agri- 


land,  but  they  do  give  a  total  figure  for  all  land  apart  from  buildings  of  $122,000,000,000. 
By  a  process  of  elimination,  an  estimate  may  be  made  for  urban  land.  The  following  items 
are  subtracted  from  the  total  to  give  the  urban  land  only  in  1920: 

Source 

Improved  farm  land  (est.  in  1922) $40,000,000,000  U.S.  Census  for  1920 

Land  owned  by  public  utilities 6,000,000,000  Federal  Trade  Commission* 

City  streets 9 ,  ooo ,  ooo ,  ooo  Federal  Trade  Commission* 

Forest  land,  493,000,000  acres,  $20  an  acre 10,000,000,000  Writer's  estimate 

Arid  land,  pasture  land,  rocky  peaks,  country 
roads,  not  included  above,  400,000,000  acres  at 
$10  an  acre 4,000,000,000  Writer's  estimate 

$69,000,000,000 
*  1922  figures  of  the  Federal  Trade  Commission. 

Subtracting  the  $69,000,000,000  from  the  total  of  $122,000,000,000  would  leave  $53,000,- 
000,000  for  all  the  land  in  all  the  villages,  cities,  and  towns  in  the  United  States.  If  one- 
half  of  this  value  is  assigned  to  the  value  of  land  in  cities  and  towns  over  30,000  in  popula- 
tion, and  to  any  other  possible  forms  of  land  wealth  omitted  in  these  deductions,  a  figure  of 
approximately  $26,000,000,000  would  be  derived  for  the  value  of  land  in  cities  over  30,000 
population.  This  would  seem  to  be  an  extremely  high  figure  to  be  deducted  but  the  esti- 
mate for  urban  land  value  here  presented  is  believed  to  be  ultra-conservative  and  to  err 
on  the  side  of  understatement  rather  than  overstatement. 

So  much  for  the  method  of  arriving  at  the  urban  land  values  for  1921.  Using  another 
method,  it  was  found  by  the  writer  that  the  sales  value  of  land  in  Chicago  in  1926  was 
$1,500  per  capita.  In  New  York  City  the  assessed  value  of  $8,000,000,000  for  the  land  alone 
in  1926  is  $1,250  per  capita,  and  this  was  probably  below  the  sales  value.  It  is  believed  that 
$1,200  per  capita  would  have  been  a  conservative  value  for  all  the  land  in  cities  over  30,000 
population  in  the  United  States  in  1927.  The  population  on  July  i,  1929,  in  such  cities  was 
44,318,900.  On  the  basis  of  a  population  of  42,000,000  for  these  cities  in  1927,  the  value  of 
this  urban  land  would  have  been  slightly  over  $50,000,000,000. 

The  foregoing  computation  is  far  in  excess  of  the  estimate  of  the  value  of  urban  land  in 
the  United  States  in  1920  made  by  W.  R.  Ingalls  in  his  Wealth  and  Income  of  the  American 
People,  who  put  the  amount  at  only  $13,800,000,000.  This  estimate  did  not  include  vacant 
urban  land,  but,  even  so,  it  seems  far  too  low.  The  basis  of  calculation  seems  to  be  wrong, 
for  the  author  arrives  at  it  by  first  computing  the  value  of  urban  buildings  at  $65,100,000,000 
by  a  very  rough  method  of  calculation  and  then  by  assuming  that  land  under  those  buildings 
represents  one-fifth  of  the  value  of  the  building  alone.  It  is  true  that  a  5  to  i  ratio  between 
buildings  and  land  has  frequently  been  assumed  as  a  normal  ratio,  but  lots  under  stores  and 
at  the  business  centers  of  our  great  cities  are  frequently  valued  as  high  as  the  buildings. 
There  are  also  large  areas  occupied  by  old  and  obsolete  buildings  where  the  value  of  the 
land  is  higher  than  that  of  the  buildings.  In  the  1928  assessment  of  land  and  buildings  in 
Cook  County,  land  and  buildings  were  assessed  at  equal  value.  It  is  true  that  the  land 


236  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

cultural  depression  began  in  1921  and,  as  farm-land  values  declined, 
many  banks  failed  in  rural  sections,  particularly  in  Iowa  where  the 
farm-land  boom  had  been  most  intense. 

On  the  other  hand,  the  return  of  five  million  soldiers  and  sailors  from 
army  camps  and  ships  to  their  homes  and  opportunities  for  employ- 
ment in  large  urban  centers  caused  an  increase  from  1920  to  1930  of 
nearly  nine  million  in  the  population  of  American  cities  of  over  thirty 
thousand  population.  The  pent-up  demand  for  luxuries  after  the  rigors 
of  war  started  a  revival  of  manufacturing  and  wholesale  trade.  There 
was  also  a  great  increase  in  the  demand  for  personal  service,  for  real 
estate  brokers  and  bond  salesmen,  for  operators  of  beauty  parlors  and 
attendants  at  gasoline  filling  stations,  and  for  advertising  and  insurance 
agencies.  The  center  of  the  demand  was  in  the  large  cities.  As  the 
flood  of  migration  came  from  the  war  camps  and  the  country  districts  to 
the  urban  centers,  which  as  a  result  of  the  war-time  restrictions  on  build- 
ing and  the  high  prices  of  building  materials  had  had  practically  no  resi- 
dential building  in  1917  and  1918,  an  acute  housing  shortage  developed. 
As  a  result  of  this  population  pressure,  apartment  rents  in  most  Ameri- 
can cities  doubled  from  1919  to  1924.  Meanwhile,  average  construction 
costs  in  the  United  States  had  dropped  from  270  in  1919  to  165  in  1921 
and  the  cost  of  operating  buildings  had  increased  but  slightly.  The 
first  result  was  that  the  net  income  of  the  owners  of  existing  buildings 
greatly  increased;  and  as  the  buildings  could  no  longer  be  reproduced  at 
their  pre-war  cost,  the  capitalized  value  of  the  income  of  existing  urban 
buildings,  their  reproduction  cost,  and  their  sales  value  all  rose  sharply. 
The  second  result  was  that  it  became  very  profitable  by  1921,  as  a  re- 
sult of  rising  rents  and  falling  construction  costs  to  erect  new  buildings. 
The  absorption  of  vacant  land  for  buildings  and  the  higher  net  return 
left  to  the  owners  of  land  under  existing  buildings  caused  urban  land 


figure  included  much  vacant  land,  but  this  land  is  on  the  average  of  far  less  value  than  that 
under  buildings. 

That  Ingall's  estimate  is  far  too  low  is  also  indicated  by  the  study  of  the  Federal  Trade 
Commission  and  the  U.S.  Census  of  Wealth,  Debt  and  Taxation.  After  deducting  known 
items  of  the  value  of  land  represented  by  farms,  there  is  still  a  large  amount  left,  which 
can  hardly  be  accounted  for  except  on  the  assumption  that  it  is  mostly  urban  land.  Fur- 
thermore, Zangerle  computed  the  land  value  of  nine  cities  with  a  population  of  11,300,000 
to  be  $8,550,869,757  in  1921.  If  Ingall's  estimate  were  correct,  there  would  be  left  only 
$5,300,000,000  plus  the  value  of  the  vacant  land  in  the  nine  cities  to  represent  the  value  of 
the  urban  land  in  all  the  other  cities  and  towns  in  the  United  States.  It  could  hardly  have 
been  that  low. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR         237 

values  in  the  United  States  to  double  between  1919  and  1926.  A  wide- 
spread sale  of  real  estate  bonds,  based  on  these  higher  values  to  a  public 
educated  to  buy  bonds  by  the  Liberty  Bond  campaigns,  resulted  in  a 
sale  of  ten  billion  dollars'  worth  of  such  securities  by  1929.  Such  was  the 
general  situation  in  the  United  States  which  existed  during  the  period 
of  the  last  real  estate  boom  in  Chicago. 

The  growth  of  the  trade  and  manufactures  of  Chicago,  1921-29. — The 
trade  and  manufactures  of  Chicago  had  a  substantial  but  not  a  re- 
markable rate  of  growth  from  1921  to  1929.  In  these  eight  years  of 
relatively  stable  wholesale  prices,  the  dollar  value  of  manufactured 
products  and  of  bank  clearings  increased  50  per  cent.123  In  the  period 
from  1921  to  1926,  surface  and  elevated  traffic  increased  25  per  cent 
while  the  number  of  new  telephones  installed  and  the  dollar  value  of  the 
wholesale  trade  increased  50  per  cent.124  Truly  spectacular  gains,  how- 
ever, were  registered  by  the  radio  industry,  the  motion-picture  indus- 
try, and  the  automobile  trade.  From  1920  to  1930  the  number  of  auto- 
mobiles in  Chicago  increased  400  per  cent.125  In  the  same  period  the 
amount  of  electricity  generated  for  Chicago  consumers  increased  133 
per  cent.126 

The  growth  in  real  estate  factors,  1919-26. — Outstripping  the  rate  of 
growth  of  manufactures,  banking,  transportation,  and  the  wholesale 
trades  in  this  last  period  was  the  growth  of  population,  building,  sub- 
division activity,  and  land  values.  From  1918  to  1926  the  population  of 
Chicago  increased  35  per  cent,  the  land  values  increased  150  per  cent, 
the  value  of  new  buildings  as  indicated  by  permits  increased  1,000  per 
cent,  and  the  number  of  lots  subdivided  in  the  Chicago  Metropolitan 
Region  increased  3,000  per  cent.127 

I2*  "Chicago  Manufactures,"  U.S.  Census;  Chicago  bank  clearings  from  a  typewritten 
statement  prepared  by  the  Chicago  Clearing  House  Association. 

I24  Elevated  traffic  from  a  letter  from  the  receiver  of  the  Chicago  Rapid  Transit  Co.; 
surface-line  traffic  from  the  eighteenth  annual  report  of  the  president  of  the  Chicago  Sur- 
face Lines  for  the  year  ending  January  31,  1932;  telephones  installed  from  a  letter  dated 
July  23,  1932,  from  the  statistician  of  the  Illinois  Bell  Telephone  Co.;  wholesale  trade — 
value  in  1918  from  Chicago  Tribune  Annual  Review  of  Business  given  at  $3,338,175,100, 
value  in  1926  given  as  $4,484,761,000  by  Mr.  Scott  of  Carson,  Pirie  &  Scott  as  coming  from 
the  Census  of  Distribution. 

MS  Figures  furnished  by  the  City  License  Department  of  Chicago. 

126  Year  Book  (Chicago:  Commonwealth  Edison  Co.,  1931). 

12?  Land-value  increase  as  computed  by  the  writer;  the  value  of  new  buildings  as  indi- 
cated by  permits  issued  by  the  Building  Department  of  the  city  of  Chicago. 


238  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

Population  increase. — The  first  of  these  phenomena  to  show  its  effect 
was  the  increase  in  population.  The  population  of  Chicago,  according 
to  estimates  based  on  the  enrolment  in  the  grade  schools,  had  remained 
almost  stationary  from  1916  to  191  y.128  Then  a  population  tide,  com- 
posed of  the  influx  of  negro  workers  from  the  south,  returning  soldiers 
and  sailors,  and  white  workers  from  smaller  cities  or  rural  sections, 
poured  into  Chicago,  until,  with  the  increase  of  births  over  deaths,  there 
was  a  total  gain  of  910,000  persons  from  1917  to  1927.  All  of  this  in- 
creased population  and  in  addition  150,000  persons  who  left  the  old 
residential  areas  within  four  miles  of  State  and  Madison  Street,  or  a 
total  of  1,060,000  persons,  settled  in  the  outer  belt  beyond  the  limits  of 
the  territory  settled  by  1880.  The  entire  effect  of  the  population  in- 
crease was  felt  by  the  new  areas,  whose  population  increased  from 
1,552,500  to  2,670,000  from  1917  to  1927,  while  the  inner  territory  de- 
clined from  848,500  to  700,000  in  the  same  period.129  In  this  old  area 
outside  the  Loop  and  the  near  North  Side,  there  was  practically  no  new 
construction  in  these  years,  but  in  the  new  expanding  territory  from 
1919  to  1929,  inclusive,  there  were  erected  buildings  with  a  street  front- 
age of  730  miles,  which  would  fill  a  solid  area  of  25  square  miles,  if  al- 
lowance were  made  for  streets  and  alleys  and  back  yards. 

The  building  boom. — The  remarkable  migration  of  population  then 
caused  a  building  spurt  that  began  in  1919  and  continued  to  a  peak  in 
1926,  from  which  it  tapered  down  gradually  to  1928  and  then  began  a 
precipitous  decline.  This  feverish  spurt  of  new  construction  was  caused 
by  the  doubling  of  Chicago  apartment  rents  from  1919  to  1924,  the  in- 
crease of  80  per  cent  in  office  rents,130  and  the  rise  in  retail  store  rents 
from  100  to  1,000  per  cent  at  the  same  time  that  operating  costs  were 

128  The  method  employed  is  that  described  by  Earle  Young,  American  Journal  of  Soci- 
ology, February,  1933.  The  number  of  pupils  enrolled  in  the  grade  schools  of  June  of  each 
year  is  taken  from  the  records  of  the  Board  of  Education.  The  ratio  between  the  total  popu- 
lation of  Chicago  according  to  the  U.S.  Census  in  1910,  1920,  and  1930  and  the  number  so 
enrolled  in  the  grade  schools  was  respectively  7.84  to  i,  7.708  to  i,  and  7.638  to  i.  The 
ratios  for  the  intercensus  years  are  derived  by  interpolating  on  the  straight-line  method,  and 
the  ratios  so  obtained  are  multiplied  by  the  school  enrolment  in  the  grade  schools  in  June 
of  each  year  to  give  the  population.  As  there  is  no  great  change  in  the  ratio  for  these  three 
census  periods,  it  is  believed  that  this  method  will  produce  fairly  reliable  results  for  this 
period.  The  results  seem  to  agree  with  facts  derived  from  general  observation. 

"» The  area  of  this  map  is  denned  as  the  area  which  declined  in  population  from  1920  to 
1930  (see  Fig.  82,  p.  357). 

^  Earl  Shultz,  "What  of  the  Future"  in  Proceedings  of  National  Association  of  Build- 
ing Owners  and  Managers  (1931),  p.  521. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR 


239 


rising  only  10  per  cent.131  The  curve  of  gross  income  and  operating 
costs,  which  had  begun  to  come  close  together  in  1919,  sprang  far  apart, 
as  Figures  34  and  35  show.132  With  rapidly  advancing  rents,  practically 
no  vacancies,  and  almost  stationary  operating  costs,  the  owner  of  an 
apartment  building  in  Chicago  had  a  bonanza  from  1920  to  1929.  The 
value  of  old  two-apartment  buildings  in  all  sections  of  Chicago  that 


FLUCTUATIONS  IN  THE  NET  INCOME  OF 

A  CHICAGO  APARTMENT  BUILDING 

1907-  1931 


sold  for  $6,000  in  1918  readily  sold  for  from  $12,000  to  $15,000  in  1926. 
The  Chicago  index  of  building  costs  declined  from  258  in  1920  to  210 
in  I922.133  New  buildings  were  nearly  always  sold  at  a  substantial  profit 
above  the  land  and  building  cost.  Bungalows  costing  $5,000  to  con- 

131  Rise  in  store  rents  taken  from  records  of  McKey  &  Poague  for  Sixty-third  Street 
near  Cottage  Grove. 

J32  Chart  based  on  the  records  in  the  office  of  the  Business  Manager  of  the  University  of 
Chicago.  Operating  expenses  include  taxes. 

'33  HolaUrd  and  Root  Index,  on  basis  of  1888  =  100. 


240 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


struct  sold  for  $7,500.  Profits  of  $25,000  and  $50,000  were  made  on 
single  multiple-apartment  buildings.  Since  the  entire  cost  of  the  build- 
ing could  often  be  borrowed,  it  is  little  wonder  that  there  was  a  rush 
into  the  building  field  analogous  to  a  Klondike  gold  rush. 

The  rapid  absorption  of  vacant  land  by  new  buildings  and  the  high 
earnings  of  existing  buildings  made  possible  by  the  purchasing  power 

FLUCTUATIONS  IN  THE  NET  INCOME  OF 

AN  OFFICE  BUILDING  IN  CHICAGO 

1905-1932 

(BUILDING  WAS  CONSTRUCTED  IN  1893) 


FIG.  35 

of  post-war  urban  labor,  which  was  reflected  in  high  apartment  rents 
and  high  store  rents,  caused  a  boom  in  vacant  land.  This  reached  its 
most  hectic  phase  in  1925  and  the  early  part  of  1926. 

SURVEY  OF  MOVEMENT  OF  CHICAGO  LAND  VALUES  BY  REGIONS 
AND  TYPES  OF  PROPERTY 

Such  are  some  of  the  broad  and  general  factors  behind  the  movement 
of  Chicago  land  values  from  1919  to  1926.  It  is  now  necessary  to  de- 
scribe that  movement  by  regions  and  by  types  of  property.  The  ensu- 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          241 

ing  discussion  will  concern  itself,  first,  with  the  central  business  district 
of  Chicago;  second,  with  the  near  North  Side;  third,  with  the  old  area 
settled  before  1880;  fourth,  with  the  outlying  business  centers;  fifth, 
with  new  tall  apartment  buildings  along  the  lake;  sixth,  with  areas  oc- 
cupied by  three-story  apartment  buildings;  seventh,  with  bungalow 
and  small-home  areas;  eighth,  with  outlying  industrial  property;  and, 
ninth,  with  subdivision  vacant  land  and  outlying  acreage. 

i.  Central  business  district. — In  the  building  boom  from  1924  to  1929, 
the  central  business  district  of  Chicago  expanded  both  vertically  and 
laterally.  The  limitation  on  the  height  of  buildings  was  raised  in  1923 
to  permit  the  erection  of  towers.  Above  the  old  twenty- two-story  pla- 
teau of  the  Loop,  nearly  a  score  of  new  pinnacles  of  from  thirty-five  to 
forty-six  stories  formed  a  new  skyline.  Notwithstanding  the  monu- 
mental appearance  of  these  tower  buildings  when  viewed  from  the 
ground,  the  floor  area  in  this  upper  stratum  above  the  twenty-two- 
story  level  was  in  1933  only  2  per  cent  of  the  entire  floor  area  in  the 
Loop. 

At  the  same  time  that  the  central  business  district  of  Chicago  was 
making  its  pioneer  ventures  into  the  layers  of  air  ranging  from  264  feet 
to  560  feet  above  the  city  datum,  it  was  sending  outposts  beyond  the 
orbit  of  its  iron-bound  circuit  of  elevated  lines.  The  commission  houses 
along  the  south  bank  of  the  main  channel  of  the  Chicago  River  were 
cleared  away,  and  the  entire  frontage  along  this  new  double-decked 
Wacker  Drive  was  made  available  for  the  raising  of  a  new  crop  of  sky- 
scrapers westward.  On  the  bank  of  the  south  branch  of  the  river  was 
completed  in  1930  the  huge  Civic  Opera  Building.  Southward  on  Mich- 
igan Avenue  beyond  Harrison  Street  was  erected  in  1928  the  Stevens 
Hotel,  which,  with  its  three  thousand  rooms  and  three  thousand  baths, 
is  the  largest  hotel  in  the  world.  Northward,  across  the  river  at  Wolf's 
Point,  the  gargantuan  Merchandise  Mart,  occupying  two  city  blocks 
of  air-right  property  over  the  railroad  tracks,  achieved  the  distinction 
in  1930  of  being  the  largest  building  yet  erected  by  man.  Eastward, 
near  the  site  of  old  Fort  Dearborn,  several  towering  office  buildings 
arose,  and  the  plans  for  a  huge  colossus  that  was  intended  to  bestride 
the  tracks  of  the  Illinois  Central  Railroad  and  to  rise  to  a  height  of  forty 
stories  was  only  blocked  by  the  inability  to  secure  a  special  ordinance 
authorizing  such  a  behemoth.  Thus  in  the  optimistic  days  of  that 
"new  era"  which  came  to  an  end  on  October  24,  1929,  the  Chicago 


242  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

Loop  surged  upward  and  outward,  and  the  air  castles  of  promoters  and 
the  dreams  of  architects  became  realities  in  steel  and  stone. 

The  spreading-out  of  the  central  business  district  in  this  period  tended 
to  prevent  the  extreme  rise  in  land  values  which  might  have  occurred 
if  the  new  office  buildings  had  been  concentrated  in  a  small  area.  The 
average  increase  in  Loop  land  values  from  1910  to  1928  was  only  62 
per  cent,  a  moderate  gain  compared  with  that  registered  by  the  out- 
lying sections  of  the  city.  Extraordinary  prices  were  indeed  paid  under 
leasehold  agreements  for  certain  corners  in  the  Loop,  but  such  transac- 
tions were  not  regarded  as  fair  criteria  of  the  market  value  even  at  the 
time.  The  promoters  agreed  to  lease  a  corner  at  extravagant  figures, 
because  they  could  float  a  bond  issue  and  erect  a  building  on  the 
strength  of  their  leasehold  without  any  cash  investment  of  their  own. 
The  subsequent  forfeiture  of  the  twenty-two-story  building  at  the 
southwest  corner  of  Clark  and  Madison  streets  for  failure  to  pay  the 
ground  rent  indicated  that  the  leasing  value  of  $50,000  a  front  foot  for 
this  corner  was  far  too  high. 

2.  The  near  North  Side. — The  central  business  district  of  Chicago, 
which  in  previous  booms  had  been  pulled  southward  by  the  influence  of 
fashionable  homes  on  Prairie,  Calumet,  and  Michigan  avenues,  received 
a  powerful  tug  from  the  North  Side  when  the  center  of  fashion  shifted 
to  the  Lake  Shore  Drive.  The  effect  was  slow  to  manifest  itself,  how- 
ever. The  growth  of  the  Gold  Coast  on  the  North  Side  had  proceeded 
far  by  1900,  but  the  northward  thrust  of  the  Loop  did  not  come  until 
the  Michigan  Avenue  bridge  was  opened  on  May  14,  1920.  Michigan 
Avenue  on  the  South  Side,  which  had  hitherto  come  to  an  end  in  the 
maze  of  wagons  on  South  Water  Street,  was  opened  through  to  the 
North  Side  and  a  new  thoroughfare  was  carved  through  the  middle  of 
the  old  boarding-house  section  on  the  near  North  Side.  The  new  dou- 
ble-decked Michigan  Boulevard  became  the  busiest  automobile  high- 
way in  Chicago.  While  the  last  vestiges  of  obsolete  houses  fronted  the 
lower  level  of  the  street,  the  newest  and  finest  examples  of  skyscraper 
architecture  presented  themselves  to  the  fashionable  throngs  passing 
along  the  upper  deck  of  the  new  avenue.  The  rise  in  land  values  that 
followed  this  almost  magical  transformation  of  a  decadent  rooming- 
house  district  into  an  annex  of  the  central  business  district  was  sensa- 
tional, increases  of  from  two  to  twenty-five  dollars  a  square  foot  in  land 
values  in  two  years  being  common. 


MAP  OF  CHICAGO 


DISTRIBUTION  OF  BUILDINGS 

SEVEN  STORIES  HIGH  OR  OVER 

1933 


LEGEND 

o? TO  12  STORIES  HIGH 

•  12  STORIES  HIGH  OR  OVER 


,.*"    :  /  :       /  « 

!— - -!•-;"  .       _:     „  /...^._/.:._ 

TOr  !/! 


FIG.  36 


244  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

3.  Tall  apartment  buildings. — In  this  period  from  1922  to  1929,  a 
fringe  of  tall  apartment  buildings  from  seven  to  twenty- two  stories 
high  grew  up  along  the  lake  front  on  the  North  Side,  and  on  the  South 
Side  from  Fiftieth  to  Fifty-sixth  streets  and  from  Sixty-seventh  to 
Seventy-ninth  streets.134  Wealthy  families  who  had  formerly  lived  in 
mansions  on  Prairie  Avenue  or  the  Lake  Shore  Drive  moved  into  de 
luxe  apartments.  People  in  more  moderate  circumstances  moved  from 
larger  apartments  of  the  older  types  into  small  furnished  kitchenette 
apartments,  where  one  or  two  rooms  were  made  to  serve  as  dining-room, 
kitchen,  and  living-room.  The  great  increase  in  the  number  of  women 
employed  in  shops  and  offices  had  lessened  the  number  of  hours  spent 
at  home,  as  had  also  the  increase  in  the  habit  of  spending  leisure  hours  in 
driving  automobiles,  in  attending  motion-picture  shows,  and  in  playing 
golf.  Small,  compact,  quarters  in  which  all  services  were  provided  for 
came  to  be  preferred  to  the  old  roomy  houses  of  the  nineteenth  century, 
which  required  a  retinue  of  servants  to  maintain  and  the  constant 
supervision  of  the  mistress  of  the  house.  Other  powerful  factors  oper- 
ating to  reduce  the  size  of  living  quarters  was  the  decline  of  the  birth- 
rate, the  decrease  in  the  size  of  the  average  family,  and  the  increasing 
number  of  childless  couples  and  of  single  persons.  The  large  apart- 
ment buildings  also  offered  advantages  in  the  form  of  dining-rooms, 
parlors,  and  swimming  pools,  and  they  afforded  opportunities  of  social 
intercourse  for  the  residents.  Thus  it  became  convenient  and  also 
fashionable  to  live  in  a  high  building  along  the  Lake  Shore  rather  than 
in  an  old-fashioned  home  with  ample  grounds,  and  to  such  an  extreme 
was  this  carried  before  1929  that  as  much  rent  was  paid  for  one  room  in 
one  of  these  buildings  as  for  six  or  seven  rooms  in  steam-heated  apart- 
ment buildings  that  were  a  little  older  and  not  so  tall. 

The  large  incomes  that  were  for  a  short  time  derived  from  tall  apart- 
ment buildings,  and  the  ease  of  borrowing  money  to  build  them,  caused 
them  to  be  erected  in  large  numbers  from  1922  to  1929.  The  construc- 
tion of  these  buildings,  which  ranged  in  height  from  six  to  twenty 
stories,  in  neighborhoods  previously  occupied  by  three-story  structures 
led  to  a  revaluation  of  all  land  in  the  vicinity  on  the  basis  of  this 
"higher  and  better  use."  The  percentage  of  the  total  land  occupied  by 
these  tall  buildings  was  small,  however,  and  did  not  exceed  one-third 

**  See  Fig.  36  on  distribution  of  buildings  seven  stories  or  more  in  height. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          245 

of  the  eligible  ground  area  in  the  immediate  vicinity  even  in  the  case  of 
the  Belmont  Harbor  district. 

4.  Two-  and  three-story  apartment  building  areas. — Encircling  the  old 
settled  areas  of  the  city,  and  filling  in  vacant  prairie  tracts  between  the 
communities  along  the  railroads,  there  arose  in  this  period  thousands  of 
apartment  buildings  two  and  three  stories  high.   These  varied  in  size 
from  the  "two-flat"  building  to  the  court  or  corridor  building  that  con- 
tained forty-two  or  more  separate  apartments.    The  distinguishing, 
characteristic  of  the  entire  class  was  the  lack  of  elevators  and  of  the 
steel  and  concrete  fireproof  construction  which  were  required  in  taller 
buildings.  The  principal  subclasses  were  the  "two-flat,"  designed  to  be 
sold  to  individuals  who  desired  a  home  and  an  income,  and  who  pro- 
vided janitor  service  to  their  single  tenant;  the  "three-flat,"  which  re- 
quired a  slightly  heavier  initial  investment  by  the  purchaser;  the  "six- 
flat";  the  "twelve-flat,"  on  a  fifty-foot  corner  lot;  and  the  larger  apart- 
ment buildings  containing  eighteen,  twenty-four,  thirty-six,  or  forty- 
two  living  units.    Apartment  buildings  containing  less  than  twelve 
apartments  were  considered  as  semi-investments,  as  the  maintenance 
and  building  cost  per  room  were  higher  in  buildings  where  one  steam 
boiler  served  only  two  apartments  than  where  it  provided  heat  for 
forty  residential  units. 

The  more  intensive  use  of  land  for  apartment  buildings  caused  a, 
rapid  rise  in  land  values  in  outlying  residential  areas  between  1921  and 
1926.  Vacant  prairie  tracts,  such  as  Devon  and  Western  avenues,  the 
Windsor  Park  golf  course,  Chatham  Fields,  Avalon  highlands,  Law- 
rence and  Kimball,  and  North  Avenue  and  Austin,  were  covered  with 
rows  of  new  buildings  in  a  few  years.  Table  XV  shows  the  rise  in  land 
values  that  took  place  in  some  of  the  new  apartment  areas  between 
1910  and  i928.I3S 

5.  Bungalow  areas. — In  the  period  following  the  World  War,  one 
hundred  thousand  bungalows  were  erected  in  Cook  County  on  the 
cheaper  land  beyond  the  apartment  areas.   Land  in  bungalow  areas 
did  not  reach  as  high  a  level  as  that  in  apartment  districts,  but  the  gain 
in  the  new  areas  was  nevertheless  large,  as  Table  XVI  shows. 

6.  Old  residential  areas. — Outside  of  the  central  business  district  of 
Chicago  is  a  belt  of  old  houses  in  which  population  is  declining  and 

135  Computed  by  George  C.  Olcott  from  his  Land  Values  Blue  Books  of  Chicago. 


246 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


vice  and  delinquency  increasing.  This  so-called  "blighted  area"  has 
had  practically  no  new  residential  buildings  for  thirty  or  forty  years, 
and  land  values  rose  but  slightly  in  the  boom  that  culminated  in  1926, 
as  Table  XVII  shows. 

TABLE  XV 
LAND  VALUES  IN  APARTMENT  AREAS  IN  CHICAGO,  1910-28 


BOUNDARIES  OF  AREA 

FRONT-FOOT  VALUE  OF  INSIDE  RESIDENTIAL  LOTS 

IQIO 

1915 

1920 

IQ2S 

1928 

Howard-Devon,  Lake   Michigan- 
Ashland 

$47-20 
5-00 

14-95 
23-2S 
6.25 

16.35 

$97-oo 
14.00 

21.28 
37-35 
iS-45 
18.00 

$141  .00 

21.12 
30.80 
43-40 
19.60 
30.30 

$377-50 
70.50 

107.35 
143-05 
50.30 
73-45 

$466.25 
118.00 

I5I-95 
243-65 
116.55 
i53-oo 

Devon-Foster,  Western-Kedzie  .  .  . 
Foster-Irving  Park,  Kedzie-Craw- 
ford     

Kinzie-Roosevelt    Road,    Cicero- 
Central 

Seventy-fifth-Eighty-seventh, 
State-Cottage 

Seventy-fifth-Eighty-seventh, 
Brandon-  Yates        

TABLE  XVI* 
LAND  VALUES  IN  BUNGALOW  AREAS  IN  CHICAGO,  1910-28 


BOUNDARIES  OF  THE  AREA 

FRONT-FOOT  VALUE  OF  INSIDE  LOTS 

IQIO 

1915 

1920 

1925 

1928 

Diversey-North,   Crawford-Cicero 
Roosevelt-Twenty-sixth,   Central- 
Ridgeland 

$11.65 
7-75 
3-35 
8.65 

$20.80 
12.50 
17.40 
12.90 

$25  .  60 
20.00 

24-15 
13.00 

$51-90 
51-75 
44.80 
27.20 

$71-30 
75-90 
73-45 
66.28 

Fifty-first-Sixty-third,      Western- 
Kedzie     

Eighty-seventh-Ninety-ninth,  Hal- 
sted—  Ashland  

*  Computed  by  George  C.  Olcott  from  his  Land  Values  Blue  Books  of  Chicago. 

7.  Industrial  areas. — The  period  following  the  World  War  was  fea- 
tured by  the  continuation  of  the  shift  of  factories  and  industrial  plants 
away  from  the  territory  adjacent  to  the  Loop  to  new  specialized  in- 
dustrial districts  along  belt-line  railroads  such  as  the  Clearing,  the 
Kenwood,  and  the  Healy  districts.  The  advantage  of  cheaper  land, 
which  in  turn  permitted  one-story  construction  with  continuity  of 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR 


247 


TABLE  XVII 

VALUE  OF  RESIDENTIAL  LAND  IN  OLD  SETTLED  AREAS 

OCCUPIED  BY  MEDIUM-GRADE  HOMES 

(Dollars  per  Front  Foot) 


Location  —  Street 

1800* 

iQiof 

iQiSt 

I929f 

193  1  J 

South  Side: 
Broad  n.  Archer  .    . 

$  65 

4° 
26 

40 

28 
85 
62 

44 
40 
26 
56 
68 
54 

g 

48 
40 
48 
52 

23 

$  IS 

40 
40 

20 
20 
70 
25 

50 
25 
25 

12 
48 
20 

45 
40 

§1 

40 
40 

20 

$15 
40 
35 

25 
22 

50 
30 
35 
So 

3 

45 
30 
70 
40 
30 
45 
30 
30 
28 

$    20 

8 

25 

32 

55 

£ 

40 
So 

20 

75 
32 
75 
40 
40 
50 
So 
50 
45 

$    20 

25 

35 

12 

2O 
40 
25 
25 
2O 
20 

g 

20 
40 
25 

35 

25 

40 
40 
25 

Buffalo  s.  Eighty-eighth  

Carpenter  s.  Fifty-sixth 

Green  Bay  n.  Ninety-first  

Justine  s.  Forty-ninth  
Langley  s.  Forty-seventh  
Paulina  n.  Thirty-fifth  

Shields  n.  Thirty-second  

Thirty-fifth  e  Auburn 

Thirty-sixth  e.  Gage  
Thirty-sixth  w.  California 

Thirty-seventh  e.  Archer  

Thirty-seventh  e.  Parnell      

Twenty-third  w.  Wentworth  
Twenty-seventh  w.  La  Salle  
Twenty-ninth  w.  Stewart 

Vernon  s.  Thirty-seventh  

Wallace  s.  Thirtieth  

Wallace  s  Twenty-ninth 

Wood  s.  Fifty-first  

Average 

$  49.40 

$93 

44 
30 

£ 

S6 
% 
^ 

30 

30 

£ 
& 

60 
65 

8 

27 

11 

55 

$  34-50 

$60 

40 

& 

So 
40 
40 
40 

£ 

35 
35 

8 

36 

zoo 

40 
80 
40 

n 

50 
4o 

55 

$     34-60 

$  55 

45 

00° 

65 

40 
40 
45 

£ 

40 
30 
30 
70 
40 
125 
45 
125 
50 
66 
38 
80 
45 
55 

$  45-40 

$  80 

50 
70 
80 
70 
40 
75 
55 
50 
60 
70 
40 

Is 

45 
125 

45 

IOO 

70 

IOO 

70 
90 

60 

IOO 

$  28.85 

$35 
40 
20 
65 
40 
40 
70 
35 
35 

£ 

30 
40 
So 

il 

& 

70 

IOO 

82 

So 
45 
55 

North  Side: 
Blackhawk  w.  Larrabee  

Bissell  s.  Clay  

Evergreen  s.  Milwaukee  
Front  (Fry)  w  Sangamon 

Holt  n.  Blanche  

Hoyne  s.  Thomas  

Huron  e  Paulina 

Huron  e.  Hoyne  

Grand  e.  Robey     .... 

Iowa  w.  Rockwell  

Lyndale  w.  Robey  
Lill  e.  Perry  (Greenview)  
Noble  n.  Ohio  

Ohio  w.  Robey   

Robey  n.  Grand  

Sangamon  s  Austin 

Sheffield  n.  Clay  

Smith  cor.  Blackhawk  
Washtenaw  cor  Iowa 

Willow  w.  Burling  

Wood  s.  Thomas          

Average         

$  52.70 

$50 
So 
70 
92 
40 
27 
83 
Si 

$  48-50 

$30 
40 
30 
40 
32 

8 

40 

$  55  -40 

$35 
50 
35 
50 

S 

70 
40 

$  70 

$40 
80 

40 

!S 

2S 
60 

70 
45 

$  50.20 

$35 

35 

50 
40 
45 
44 
60 
45 

West  Side: 
Fifteenth  e.  Wood   

Fifteenth  e  Union 

Eighteenth  e.  Western  

Fisk  s  Sixteenth                  

Flournoy  e.  Francisco  

Fourteenth  cor.  Lincoln  
Laflin  s  Polk 

*  The  1890  figures  are  from  sales  tabulated  by  M.  L.  Putney,  Land  Values  and  Historical  Notes  of  Chicago 
(1890). 

t  The  figures  for  1910,  1915,  and  1929  are  from  George  C.  Olcott,  Land  Values  Blue  Books  of  Chicago  (1910, 
1915,  1929). 

J  The  figures  for  1931  are  from  the  assessed  value  of  land  in  Cook  County  for  1931. 


248  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

TABLE  XVII— Continued 


Location  —  Street 

1800* 

igiof 

I9i5t 

IQ2Qt 

193  it 

West  Side  (continued) 
May  s  Eighteenth            

$  44 

$  60 

$  60 

$   60 

$  40 

Nineteenth  e.  Western  

44 

40 

40 

45 

40 

Nutt  (Loeffler)  s.  Sixteenth  

7O 

35 

45 

70 

40 

Park  (Maypole)  w.  Western  

60 

35 

30 

70 

35 

Sixteenth  e.  California  

48 

30 

45 

50 

45 

Sixteenth  e  Wood         

66 

30 

25 

40 

40 

Thirteenth  w  Robey 

64 

AC 

Thirteenth  w.  Paulina  

& 

83 

4«> 
60 

£ 

65 

30 

Troy  n.  Twenty-fifth  
Twentieth  e  Albany 

48 

27 

25 
20 

40 

35 

55 
50 

30 
3? 

Twentieth  w.  Lincoln  

48 

50 

50 

40 

40 

Twentieth  w.  May        

63 

60 

60 

60 

40 

Twenty-first  e  Paulina 

64 

45 

75 

Twenty-first  w.  May  
Washtenaw  near  Fourteenth  
Washtenaw  s.  Fulton  

60 
30 
33 

40 
30 
30 

40 

35 
35 

70 
45 
65 

75 
35 
30 

Spring  s  Canalport      

51 

40 

60 

70 

25 

Average  

$  55 

$  40 

$  56  50 

$  41  .50 

plant  operation,  lower  taxes,  direct  freight-car  service  into  the  plant, 
a  better  lot  layout  for  industrial  purposes,  and  closer  contacts  with  as- 
sociated and  complementary  industries,  favored  the  growth  of  these 
outlying  industrial  areas.  As  a  result,  land  values  of  industrial  tracts 
rose  faster  in  these  newly  developed  tracts  than  in  the  old  districts  near 
the  Loop.  This  is  shown  by  Table  XVIII. 

TABLE  XVIII 

VALUE  OF  LAND  IN  INDUSTRIAL  AREAS,  1910-29 
(Per  Square  Foot  Except  as  Otherwise  Indicated) 


Boundaries  of  Areas 

1910 

1915 

1918 

1921 

1925 

1929 

New  Districts 

Healy  manufacturing  district-Fuller- 
ton—  Crawford  

$    0.03 
600* 

0.25 
0.03 
0.15 
0.05 

$      O.IO 

800* 

0.60 

O.IO 

0.30 

0.25 

$      0.30 
1,000* 
1-25 

O.I2 
0.40 
O.4O 

$      0.65 
1,000* 
1-25 

1.  00 

0.40 

I.IO 

$      0.85 
1,500* 
1-35 

I  .00 

0.65 

I  .00 

$       1.25 
3  ,  Soo* 
3.00 

I  .00 

0.80 

I.OO 

Clearing,      Sixty-fifth-Seventy-first- 
Cicero  to  Harlem 

Central  manufacturing  district-Thir- 
ty-ninth-Ashland,  sw.  cor  
Kenwood-Forty-seventh  and  Kedzie  . 
Cicero-Division  
Forty-seventh-Western,  ne.  cor  

Jackson-Monroe,  Halsted-Morgan  .  . 
Calumet     River,    Ninety-ninth-One 
hundred  and  sixth  

Old  Districts 

$250f 

$44ot 
o  .30 

$  425t 

$425t 
0.25 

6.00 
i  .10 
5.00 
5.00 

$  43of 
0.25 

6.67 
i.  20 
6.00 
S-oo 

$  Soof 
0.30 
7.00 

1.20 

6.00 
5.00 

North    Branch,   east   bank    Kinzie- 
Chicago 

4-33 
0.90 

IO.OO 

5.00 

5-33 
i  .00 
8.00 
5.00 

5.67 

I  .00 

8.00 
5-oo 

South  Branch  at  Morgan  
State-Sixteenth  

South  Branch,  Roosevelt-Sixteenth.  . 

*  Per  acre. 


t  Per  front  foot. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          249 

8.  Outlying  business  centers. — As  Table  XX  shows,  the  average  value 
of  outlying  business  corners  doubled  between  1910  and  1915,  and  then, 
as  the  rising  prices  of  building  materials  and  the  war  halted  new  con- 
struction, remained  stationary  from  1915  to  1921.  The  rapid  growth  of 
population  in  the  outlying  areas  from  1921  to  1927,  however,  caused 
the  upward  course  of  values  to  be  resumed  until  the  sales  prices  of  the 
major  corners  tripled  on  the  average  between  1921  and  1928.  Not  only 
did  an  increase  of  population  of  one  million  in  these  newly  developed 
territories,  combined  with  employment  at  high  wages,  furnish  added 
consumer  purchasing  for  local  stores,  but  a  number  of  factors  tended  to 
divert  much  of  this  shopping  away  from  the  Loop  to  these  community 
centers.  The  rapid  growth  of  outlying  banks  furnished  depositories  for 
local  funds  and  collected  neighborhood  savings  for  reinvestment  in 
local  building  projects.  The  new  palatial  motion-picture  houses  fur- 
nished the  same  entertainment  that  was  afforded  in  the  Loop.  The 
Walgreen  Drug  Store,  the  Woolworth  or  Kresge  Store,  or  the  Gold- 
blatt  or  Wieboldt  Department  Store  offered  a  wide  choice  of  merchan- 
dise. Hence  the  residents  in  these  new  areas,  finding  it  increasingly 
difficult  to  park  their  automobiles  in  the  downtown  area,  came  to  prefer 
to  do  their  banking,  shopping,  and  to  seek  their  entertainment  close  to 
home. 

As  a  result,  store  rents  in  some  of  the  major  outlying  centers  increased 
1,000  per  cent  from  1915  to  1928.  The  gain  in  land  values  on  the  full 
section  line  streets  that  were  traversed  by  car  lines  and  that  were 
zoned  for  business  or  upon  the  radial  streets  that  were  main  thorough- 
fares exceeded  the  increase  of  any  other  type  of  property.  The  inter- 
section of  two  full  section  lines,  where  two  street-car  lines  usually 
crossed,  produced  a  peak  of  land  values  because  these  so-called  double- 
section  or  transfer  corners  commanded  exceptionally  high  rents  as  loca- 
tions for  drug  stores,  cigar  stores,  and  banks.  The  competition  among 
rival  department-store  chain  organizations  for  good  locations  as  a 
means  of  swelling  their  volume  of  sales  and  thereby  to  enable  them  to 
sell  more  of  their  securities  caused  rents  to  advance  above  what  other 
lessees  could  afford  to  pay.  The  bidding  of  rival  banks,  drug  stores,  and 
cigar  stores  for  corners  was  likewise  keen,  and  in  several  instances 
transfer  corners  were  leased  by  one  organization  for  the  purpose  of 
keeping  them  out  of  the  hands  of  a  rival  concern.  In  the  prosperous 
times  prior  to  1929,  many  clerks  set  themselves  up  in  business  and  for 
a  while  did  a  profitable  trade.  All  of  these  factors  caused  business  areas 


250 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


to  expand  and  store  rents  to  rise.  Large  office  buildings  were  erected  on 
some  of  the  outlying  corners,  so  that  the  development  was  intensive  as 
well  as  extensive. 

LAND  VALUES  ON  79  STREET  -  STONY  ISLAND  TO  CRAWFORD  AVENUES 
1910,  1928,1931 


Lawrence  Avenue  on  the  North  Side  and  Seventy-ninth  Street  on  the 
South  Side  ran  through  the  center  of  zones  of  maximum  population  in- 
crease, and  the  rise  in  land  values  for  the  entire  length  of  these  streets 
shown  in  Figures  37  and  38  probably  exceeded  that  of  any  other  streets 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR 


251 


in  the  city.  Hundreds  of  outlying  corners,  however,  rose  into  the 
thousand-dollar-a-front-foot  class  in  the  boom  from  1921  to  1926. 
Table  XIX  shows  the  course  of  land  values  on  a  number  of  prominent 


LAND  VALUES  ON  LAWRENCE  AVENUE 
1910,  1928,1931 


FIG.  38 

corners.  Figures  39  and  40  indicate  graphically  the  increase  in  the 
value  of  such  corners  between  1910  and  1928.  Table  XX  gives  the 
average  value  of  1,700  outlying  business  corners  at  425  different  street- 
car intersections,  showing  the  increases  from  1910  to  1929.  In  1910 


252 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


TABLE  XIX* 

VALUE  OF  LAND  AT  PRINCIPAL  OUTLYING  BUSINESS  CORNERS 

OF  CHICAGO,  1910-29 

(Dollars  per  Front  Foot) 


Location 

IQIO 

IQI5 

1918 

IQ2I 

1925 

1929 

South  Side: 
Fif  ty-third-Lake  Park  

$     250 

$      750 

$      750 

$1  ,000 

$1  ,  COO 

$    2,  7  (CO 

Sixty-third-Halsted 

I    ^OO 

5OOO 

5    OOO 

4    OOO 

9  ooo 

IO   OOO 

Sixty-third-Cottage 

7"?O 

I    7  co 

I    7^0 

2    OOO 

5    OOO 

7    OOO 

Sixty-  third—  Ashland  .  .  .  . 

7:50 

I  ,  ^OO 

I     C.OO 

I    3  ^O 

2    OOO 

3    OOO 

Sixty-  third-  Western  

IOO 

7^O 

OOO 

800 

I    7  "sO 

2    £,OO 

Sixty-third—  Kedzie  

7C 

400 

700 

600 

I  ,  CQO 

2    OOO 

Seventy-first-  Jeff  ery  
Sixty-seventh-Stony  Island  . 
Ninety-second-Commercial  . 
One  Hundred  and  Eleventh- 
Michigan  

IOO 
IOO 

450 

IOO 

750 

1,500 

700 

500 

I,  OOO 

1,500 

700 

400 

900 

1,500 
800 

1,300 

3,000 
2,500 

2    OOO 

2,250 

4,000 
4,000 

4  ooo 

Seventy-ninth—  Cottage  .  .  . 

20 

300 

300 

2OO 

I     C.OO 

3    7">O 

Seventy-ninth—  Halsted  .  .  .  . 

600 

1  ,000 

1  ,000 

1  ,000 

2    C.OO 

4cno 

Seven  ty-ninth-Ashland  
Forty-seventh-  Ashland  
West  Side: 
Madison—  Kedzie 

IO 

800 

COO 

400 
1,500 

2    OOO 

500 
1,750 

I    'JOO 

400 
1,750 

I    7^0 

1,250 

3,000 

2    <.OO 

2,500 

4,000 
3  POO 

Madison—  Crawford 

SOO 

OOO 

I    IOO 

I    2  <O 

2    2  C.O 

7    OOO 

Madison—  Cicero  

2<O 

,  2OO 

1  ,000 

800 

2    OOO 

2    'JOO 

Roosevelt-Halsted  

2,OOO 

,  c,oo 

2  ,  C.OO 

2    C.OO 

3    OOO 

5    OOO 

Roosevelt-Kedzie  
Roosevelt—  Crawford  

500 
600 

,500 
,OOO 

1,500 

1  ,000 

1,750 
I  ,OOO 

2,500 

I  ,  ^OO 

4,000 

2    C.OO 

Madison-  Ashland  

7OO 

,OOO 

1  ,000 

800 

I  ,  ">OO 

2  ,  tCOO 

Lake-Marion,  Oak  Park  
North  Side: 
Chicago—  Ashland     

175 
IOO 

175 
7^0 

175 

I    OOO 

2OO 
I    OOO 

1,000 

I    7^0 

2,250 
3    OOO 

Milwaukee-Division  
North-California  
North-Milwaukee  
Clark-Center 

I,2OO 
150 
500 
I  ^.O 

3,500 
1,500 
1,500 

-2QO 

3,000 
1,250 
1,500 

•2QO 

4,000 

1,000 

1,750 

C.OO 

5,000 

2,000 
2,000 
2    OOO 

5,000 
2,500 

2,000 
2    2  C.O 

Milwaukee-Western  
Logan  Square 

2OO 

i  cn 

1,250 
600 

1,250 
600 

I,25o 

7C.O 

2,OOO 
800 

2,250 
I    7^O 

North-Crawford  
Grand-Harlem  
Broadway-Clark  
Lincoln-Belmont  
Milwaukee-Cicero  

60 

500 

750 
25O 

1,250 
150 
500 
2,OOO 
I  ,OOO 

1,000 
200 

800 

2,500 

1  ,000 

1,000 

200 

900 

2,250 

I  ,  IOO 

2,OOO 
600 
2,000 

4,000 
i  ,7  co 

3,000 
1,250 
3,ooo 
6,000 
3  1  7^o 

Lawrence—  B  roadway 

IOO 

I    2  "CO 

I    7^0 

2    OOO 

4    OOO 

5C.OO 

B  roadway—  Wilson 

300 

2,OOO 

2.  2C.O 

2    7  to 

6  ooo 

5C.QO 

Wilson—  Sheridan  

I<O 

I  .  C.OO 

1  ,  7  CQ 

2,  C.OO 

6  ooo 

C,     COO 

Lawrence-Sheridan  
Lawrence-  Western  
Lawrence-Kedzie  

125 

2OO 

50 

375 
800 
500 

675 

800 

750 

I,OOO 
900 
I  ,OOO 

2,500 
1,700 
2,000 

4,250 
3,500 

3,000 

Lawrence-Kimball  
Lawrence-Milwaukee  
Devon-Sheridan  
Devon-Western  
Howard—  Paulina 

ISO 
60 
2OO 

4.O 

700 
500 
750 

IOO 

oo 

700 
500 
750 

J5o 

2  CO 

700 

450 
600 
250 
22  ^ 

1,500 

1,200 
2,OOO 
I,OOO 
I    OOO 

2,750 

2,000 
3,000 
2,000 

2    ^OO 

George  C.  Olcott,  Land  Values  Blue  Books  of  Chicago  (1910, 1915, 1918,  1920, 1925,  and  1929). 


MAP  OF  CHICAGO 

-SHOWING- 
LAND  VALUES  OF  THE  PRINCIPAL 
BUSINESS  CORNERS  OUTSIDE  THE  LOOP 
1910 


VALUES  PER  FRONT  FOOT 

•  $   200-$    499 

•  500  -        999 

•  1,000-     2,499 

•  2,500-     4,999 
A  5,000  -  10,000 


PREPARED  BY  HOMER  HOYT  FROM 

OLCOTT'S  LAND  VALUE  MAPS 

OF  CHICAGO -1910 


FIG.  39 


MAP  OF  CHICAGO 

-SHowiNG- 
VALUES  OF  THE  PRINCIPAL 
BUSINESS  CORNERS  OUTSIDE  THE  LOOP 
1928 


VALUES  PER  FRONT  FOOT 

•$      200-$      499 

•  500  -         999 

•  1.000-     2,499 
2.500  -     4.999 
5.000  -  10.000 


PREPARED  BY  HOMER  HOYT  FROM 

OLCOTT'S  LAND  VALUES  BLUE  BOOK 

OF  CHICAGO -1929 


[;       I.---*" 
•-- •=* i t-~ 4-*-t~»"+-*- 
t  •  *     »  •.     .^--        v 
•»—•"+• f- ^— -•^--•-••-•-^"••--•f----0^Hw'"rV"jr''ffr 

^l^i|4^44if,_ 

i      J        I        i     ••       tvV^          »\ 


»-'-->'-->-- 


FIG.  40 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR 


255 


only  52  corners  at  13  different  street-car  intersections  were  valued  at 
one  thousand  dollars  or  more  a  foot,  but  by  1929  the  number  of  one- 
thousand-dollars-a-foot  corners  had  increased  to  816  at  204  different 
intersections. 

9.  Subdivision  and  acreage  tracts. — Prior  to  the  boom  of  1925,  most 
of  the  land  within  the  city  limits  of  Chicago  had  been  subdivided  as 
Figure  41  shows.  In  this  last  boom,  however,  nearly  all  of  the  remain- 
ing areas  that  were  not  industrial  were  converted  into  lots.  The  far 
northwest  and  the  far  southwest  corners  of  the  city  limits  and  the  Calu- 

TABLE  XX* 

AVERAGE  VALUE  OF  THE  LAND  AT  425  STREET- 
CAR INTERSECTIONS  IN  CHICAGO, 
1910-29 


Year 

Per  Front  Foot 
Average 

Index  Numbers 
1910=  100 

1910  

IQIS  
1920 

$      222 

444 

A  A  A 

IOO 
2OO 
2OO 

IQ2C 

880 

4.OO 

IQ2Q 

1  ,  202 

582 

*  George  C.  Olcott,  Land  Values  Blue  Books  of  Chicago  (1910, 
1915,  1920,  1925,  and  1929). 


met  region  were  platted  and  offered  to  lot-buyers.  The  boom  did  not 
stop  with  the  city  limits,  however,  but  went  far  beyond  them.  When 
the  extension  of  the  rapid  transit  system  to  Niles  Center  and  the  Skokie 
Valley  was  announced  in  1925,  the  prices  of  acre  tracts  jumped  from 
$500  to  $3,000  an  acre  overnight.  A  belt  of  land  three  miles  wide  was 
subdivided  along  the  North  Shore  for  forty  miles  to  Waukegan  and 
even  to  the  Wisconsin  State  line.  The  uninterrupted  advance  of  the 
North  Shore  since  1900  make  this  territory  the  most  fruitful  of  all  for 
the  subdivider.  Other  sections  were  not  neglected,  however.  A  line  of 
new  subdivisions  was  opened  along  the  line  of  the  Chicago  &  North- 
western Railroad  past  Arlington  Heights  to  Barrington  and  Lake 
Geneva.  The  extension  of  the  rapid  transit  lines  to  Westchester  and 
the  growth  of  the  western  suburbs  led  to  the  opening  of  new  subdivi- 
sions along  Roosevelt  Road  and  the  new  electric  line  as  far  west  as 
Wheaton.  Southward,  the  electrification  of  the  Illinois  Central  Rail- 


MAP  OF  CHICAGO 


SUBDIVISIONS 
I860  TO  1932 


LEGEND  FOR  DATA 

feggg  AREAS  SUBDIVIDED  BEFORE  I860 
{iB-j  AREAS  SUBDIVIDED  FROM  I860  TO  1685 
AREAS  SUBDIVIDED  FROM  I886TO  1893 
YZJftft  AREAS  SUBDIVIDED  FROM  1894  TO  1899 
[~~~]  AREAS  SUBDIVIDED  FROM  1900 TO  1915 
HH  AREAS  SUBDIVIDED  FROM  I9I6TO  1929 


FIG.  41 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          257 

road  to  Matteson  caused  developments  at  Ivanhoe,  Flossmoor,  and  as 
far  south  as  Two  Hundredth  Street.  Southeastward,  a  new  rapid  trans- 
it line  to  Michigan  City  and  South  Bend  paved  the  way  for  develop- 
ments of  several  thousand  acres  along  the  lake  near  Michigan  City. 
Southwestward,  the  new  automobile  highways  opened  up  new  tracts  as 
far  away  as  One  Hundred  and  Twenty-seventh  and  Harlem  Avenue. 

The  supply  of  lots  that  was  thus  thrown  upon  the  market  in  1925  and 
1926  quickly  exceeded  any  possible  demand,  but  great  organizations 
employing  systematic  tactics  realized  over  $100,000,000  from  the  sale 
of  lots  in  1925  alone.  The  public  was  canvassed  by  telephone  men  who 
called  nearly  every  person  listed  in  the  telephone  directory  and  sought 
to  make  an  appointment  with  a  salesman.  Salesmen  were  hired  to 
make  sales  among  the  circle  of  their  acquaintances.  Free  train  rides 
and  free  lunches  lured  the  prospect  to  the  property  where  promises  of 
a  safe  investment  coupled  with  a  great  speculative  profit  led  many  peo- 
ple of  small  means  to  invest  their  life-savings.  The  prices  obtained  for 
these  lots,  on  down  payments  varying  from  20  to  33  per  cent  of  the  pur- 
chase price,  were  from  three  to  ten  times  the  current  boom  price  for 
large  tracts  of  land,  and  frequently  two  to  three  times  as  high  as  the 
current  price  of  subdivided  lots  adjoining  the  new  subdivision,  but 
purchasers  in  this  artificial  market  were  afforded  little  time  to  make 
comparisons. 

The  sale  of  lots  by  subdividers  did  create  a  speculative  market  for 
acreage  tracts.  Farms  were  bought  to  sell  to  subdividers  or  to  other 
speculators  on  the  basis  of  what  the  land  would  sell  for  if  subdivided 
less  the  cost  of  marketing  it.  Thus  the  suburban  area  for  forty  miles  or 
so  from  Chicago  felt  the  stimulus  of  the  speculative  boom. 

In  these  subdivisions,  "business  corners"  sold  for  high  prices,  and  an 
unduly  high  percentage  of  land  was  designated  as  business  land  or 
apartment  or  high-grade  residential  land,  for  it  was  evident  that  these 
more  intensive  uses  afforded  greater  opportunities  of  profit-making. 

THE  CHICAGO  REAL  ESTATE  MARKET  AS  A  WHOLE,  IQ2I-2Q 

In  the  Chicago  real  estate  market  as  a  whole,  these  various  factors 
just  described  interacted  or  furnished  a  succession  of  stimuli  to  land- 
buyers.  Different  types  of  properties  and  different  sections  of  the  city 
and  suburbs  competed  for  the  favor  of  purchasers,  and  some  territories 
lay  dormant  while  other  areas  were  enjoying  booms. 


258  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

The  advance  in  real  estate  began  with  the  rise  in  the  value  of  old 
apartment  buildings,  which,  as  a  result  of  rising  rents  and  higher  build- 
ing costs,  more  than  doubled  in  value  from  1919  to  1926.  As  an  exam- 
ple of  the  general  upward  movement,  two-apartment  buildings  that  sold 
for  $7,000  in  1919  brought  $15,000  in  ig26*36  The  movement  spread  to 
the  building  of  stores  and  apartment  buildings  of  the  walk-up  type,  in 
which  great  profits  were  made  by  speculative  builders  from  1921  to 
1925.  A  rapid  rise  in  business  and  apartment  lots  ready  for  building 
then  began.  By  the  spring  of  1925  a  great  subdivision  and  acreage 
boom  was  under  way  and  real  estate  was  most  active  in  all  its  phases — 
building,  subdivision,  acreage  sales,  business  leases — in  all  sections  from 
the  Loop  to  the  forty-mile  suburban  radius.  In  the  fall  of  1926  the 
collapse  of  the  Florida  boom  helped  to  put  a  damper  on  the  excessive 
subdivision  and  speculative  activities  in  vacant  land.  The  building  of 
large  office  and  apartment  buildings  continued  with  undiminished  ardor 
in  1927  and  1928,  however,  and  the  competition  of  chain  stores  for 
space  caused  land  values  to  rise  in  established  business  centers  like 
Sixty-third  and  Halsted  Street  and  Madison  and  Crawford.  The  gen- 
eral market  was  growing  dull,  however,  and  while  there  were  no  reces- 
sions in  asking  prices,  it  was  becoming  more  and  more  difficult  to  sell 
for  cash,  and  a  general  trading  in  equities  began.137  Lot-buyers  began 
to  default  on  their  contracts  and  second-mortgage  holders  to  foreclose 
in  1928  and  the  early  part  of  1929.  The  last  business  sections  to  enjoy 
booms  were  the  Davis-Orrington  section  in  Evanston,  where  the  ad- 
vance continued  to  the  fall  of  1929,  and  the  Lake-Marion  section  in 
Oak  Park  where  it  continued  even  into  1930.  On  October  24,  1929, 
however,  a  great  crash  in  the  stock  market  terminated  the  "new  era" 
of  uninterrupted  profits  and  unchecked  speculative  advance. 

Chicago  land  values  at  the  peak. — The  sales  value  of  the  land  in  the 
city  limits  of  Chicago  increased  from  two  billion  dollars  in  1921  to  five 
billion  dollars  by  I928.138  This  increase  in  the  site  value  of  the  city  was 

J36  According  to  sales  reported  by  Chicago  real  estate  brokers. 

J37  According  to  the  statements  of  numerous  real  estate  brokers. 

^  Computed  on  the  basis  of  the  values  in  George  C.  Olcott,  op.  cit.  The  correctness  of 
this  computation  is  checked  by  another  method.  The  1928  assessment  of  land  in  the  city 
of  Chicago  was  $3,710,000,000  full  value.  According  to  estimates  made  by  Professor 
Herbert  Simpson  in  his  book,  Tax  Racket  and  Tax  Reform,  and  also  by  the  writer,  this  assess- 
ment was  approximately  75  per  cent  of  the  full  sales  value,  which  would  give  the  sales  value 
as  five  billion  dollars  for  1928. 


MAP  OF  CHICAGO 

-SHOWING- 

RESIDENTIAL  LAND  VALUES  PER  FRONT  FOOT 

1926 


FRONT  FOOT  VALUES  IN  DOLLARS 

HH  100  AND  OVER 
50  TO  99 
26  TO  49 

4  TO  25 


BASED  ON  GEORGE  C.  OLCOTT  BLUE  BOOKS  OF 
LAND  VALUE.  1920  TO  1930 


PREPARED  BY  HOMER  HOYT 


FIG.  42 


MAP  OF  CHICAGO 

-SHOWING- 
LAND  VALUES  -1928 

AVERAGE  VALUES  FOR  960  ACRE  TRACTS  IN  DOLLARS  PER  ACRE 
SOURCE: GEORGE  COLCOTT'S  LAND  VALUES  BLUE  BOOK  OF  CHICAGOH929 


STHCCT 

i  tracer 


i     I       5 


FIG.  43 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR 


261 


by  no  means  equally  distributed  by  regions  or  types  of  property,  as 
Table  XXI  shows. 

As  Figure  45  shows,  the  increase  in  land  values  was  greatest  in  two 
semicircular  belts,  north  and  south,  that  traced  arcs  around  the  old 
blighted  area  where  population  declined  between  1920  and  1930  and 

TABLE  XXI 

VALUE  OF  LAND  BY  PRINCIPAL  AREAS  AND  TYPES  OF  USE  IN 

CHICAGO,  1910  AND  1928,  COMPARED  WITH  POPULATION 

GROWTH,  1910  AND  1930 


LAND  VALUE 
(MILLIONS  or  DOLLARS) 

POPULATION 
(THOUSANDS) 

IQIO 

1928 

1910 

1930 

Area: 
The  Loop  

$600 
400 
500 

$1,000 

1,000 
3,000 

Area   bounded    by    Belmont, 
Kedzie,    Pershing,    outside 
the  Loop 

731 
967 

2 

720 
,656 

Area  in  1933  city  limits  north 
of  Belmont,  west  of  Kedzie, 
and  south  of  Pershing  Road 

Type  of  use: 
Residential  

By  Uses 

Percentage  Increase 

$500 
200 
200 
600 

$2,267 
400 

1,333 
1,000 

353 

IOO 

566 
67 

Industrial  
Outlying  business  

Central  business 

Residential  

Average  15  Districts  in  Outlying  Areas 

$37 
29 

$  316 
390 

760 
1,247 

Outlying  business  

where  the  population  that  remained  consisted  of  races  or  nationalities 
that  were  lowest  in  the  economic  and  social  scale.  It  was  in  this  area 
that  was  largely  settled  between  1899  and  1926,  as  Figure  44  shows, 
that  the  largest  increases  in  land  values  occurred.  The  extension  of 
transportation  facilities  into  these  areas;  as  Figure  46  indicates,  had 
likewise  facilitated  the  process  of  settlement  and  the  rise  in  land  values. 


MAP  OF  CHICAGO 

-SHOWING- 


EXTENT  OF  SETTLED  AREA 
IN    1926 


LEGEND 

AREAS  SETTLED  BETORE  1699 

GROWTH  OF  SETTLED  AREA  FROM    1899-1926 


NOTE:   BASE  MAP   SHOWS    PRESENT  CtTY  STRUCTURE 


PREPARED   BY  HOMES 


FIG.  44 


MAP  OF  CHICAGO 


INCREASE  IN  LAND  VALUES 
1918  TO  1928 


PERCENTAGE  OF  INCREASE 
LESS  THAN  100  PER  CENT 
100  TO  299  PERCENT 
300  PER  CENT  AND  OVER 


!   I    I 


FIG.  45 


MAP  OF  CHICAGO 

-  SHOWING  - 


EXTENSIONS  TO 

SURFACE  AND  ELEVATED  LINES 

1903  TO  1932 


LEGEND 

— —  ELEVATED  UNES 

— —  SURFACE  LINES  BUILT  FROM  1903  TO  1918 

— — —  SURFACE  LINES  BUILT  FROM  1919  TO  1933 

TROLLEY  BUS  LINES 

NILES  CENTER  EXTENSION.I925 


FIG.  46 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          265 

THE  PERIOD  FROM  1929  TO  1933 

Dulness  sets  in. — The  Chicago  real  estate  market  had  begun  to  grow 
dull  as  early  as  1927.  A  decline  in  the  volume  of  transfers,  of  new  build- 
ings, and  of  lots  subdivided  had  indicated  that  the  feverish  activity  of 
1925  and  1926  was  subsiding,  while  a  slight  increase  in  the  number  of 
foreclosures  was  a  barometer  of  approaching  financial  storms.  The 
underlying  reason  for  this  slackening  of  the  pace  of  speculation  had  been 
the  falling-off  in  the  rate  of  population  growth  in  the  Chicago  area 
after  ig2f39  while  the  supply  of  residential  accommodations  was  being 
greatly  increased.  As  a  result,  apartment  rents  ceased  to  advance, 
while  operating  costs  commenced  to  creep  upward.  The  demand  of 
builders  for  vacant  lots  began  to  abate,  and  the  buyers  of  subdivision 
lots  had  already  discovered  that  they  could  rarely  resell  their  holdings 
at  a  profit. 

While  the  land  market  was  thus  losing  its  buoyancy,  in  1927  and 
1928,  there  were  no  recessions  in  values.  In  fact,  asking  prices  of  prop- 
erties continued  to  advance  slowly.  Cash  transactions  were  becoming 
less  frequent,  however,  and  the  illusion  of  a  rising  market  was  sustained 
by  trades  of  one  type  of  property  for  another,  in  which  the  price  was 
padded  by  both  parties.140  The  high  level  of  values  was  also  supported 
by  first-and  second-mortgage  loans,  so  that  owners  could  borrow  up  to 
80  per  cent  of  the  peak  value  of  their  property,  even  when  they  could 
not  sell  their  entire  equity.  The  market  for  real  estate  "gold"  bonds 
was  still  so  good  that  huge  Loop  office  buildings  and  large  apartment 
hotels  could  be  financed  on  the  proverbial  shoestring.  In  many  cases  it 
was  possible  for  a  promoter  to  borrow  enough  money  on  a  bond  issue  to 
buy  a  lot,  erect  a  twelve-story  building,  and  pay  himself  a  cash  profit 
besides.  Some  operators  negotiated  leases  of  Loop  corners  at  high  fig- 
ures, put  out  a  bond  issue  on  the  security  of  the  leasehold,  and  then 
proceeded  to  erect  a  skyscraper,  to  which  they  held  title,  without  having 
made  any  substantial  investment. 

The  stock-market  boom  and  crash. — Notwithstanding  these  efforts  to 
prop  up  real  estate  values  from  1927  to  1929,  the  speculative  public  was 
forsaking  real  estate  for  the  stock  market.  Land  purchases  no  longer 

139  See  the  computations  of  the  writer  based  on  the  school  enrolment. 

J4°  The  prevailing  practices  of  this  time  are  illustrated  by  the  story  of  the  lady  who  had 
a  dog,  which  she  insisted  was  worth  $10,000.  One  day  she  triumphantly  announced  to  a 
friend  that  she  had  sold  the  dog  for  $10,000.  "Did  you  get  cash?"  inquired  the  friend  in- 
credulously. "No,  not  exactly,"  said  the  lady,  "but  I  got  two  $5,000  cats  for  him." 


266  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

yielded  quick  cash  profits,  and  real  estate  ceased  to  lure  the  crowds  of 
new  buyers  who  were  being  attracted  by  the  fortunes  that  were  being 
made  in  securities.  Consequently,  many  real  estate  operators  viewed 
the  stock-market  crash  of  October  24,  1929,  with  ill-concealed  satisfac- 
tion. The  public  would  be  taught  not  to  dabble  in  margin  accounts, 
they  thought,  and  would  return  to  land-buying  as  the  safest  form  of  in- 
vestment. 

It  was  soon  discovered,  however,  that  the  financial  collapse  was  not 
confined  to  the  stock  market,  and  that  the  readjustment  of  values  could 
not  fail  to  affect  the  entire  American  economic  structure.  The  decline  in 
real  estate  activity  continued  in  1929  and  1930.  The  number  of  transfers 
in  Cook  County  declined  from  102,239  in  1927  to  67,770  in  I930.141  The 
value  of  new  construction  in  Chicago,  as  shown  by  permits,  fell  off  even 
more  drastically  from  $315,800,000  in  1928  to  $79,613,400  in  i93o.I4a 
Subdivision  activity  came  to  a  complete  standstill.  The  number  of  fore- 
closures in  Cook  County  increased  from  3,148  in  1928  to  5,818  in  i93o,143 
and  the  second-mortgage  holders,  who  had  been  the  first  to  foreclose, 
were  now  themselves  being  forced  out  by  the  holders  of  the  underlying 
liens.  Loans  on  new  mortgages  and  trust  deeds  dropped  from  over 
$1,000,000,000  in  1928  to  $425,000,000  in  I930.144 

Up  to  1930,  however,  there  had  been  only  a  moderate  recession  in 
rents,  in  wages,  and  in  employment.  The  majority  of  real  estate  owners 
were  grimly  hanging  on,  hoping  for  a  revival  that  would  restore  the 
prosperous  days  of  1926. 

The  sharp  decline  of  real  estate  values  in  ipji. — In  1931  came  the  col- 
lapse of  the  peak  values  of  1928.  Chicago  real  estate  received  a  series 
of  shocks  which  forced  reluctant  owners  to  admit  that  a  drastic  decline 
had  occurred.  Sharp  reductions  in  employment  and  in  wage  rates,  as 
wages  paid  by  American  manufacturing  industries  dropped  from  $11,- 
500,000,000  in  1929  to  $7,000,000,000  in  1931,  forced  store  and  apart- 
ment rents  downward. 

As  Tables  XXII  and  XXIII  show,  the  decline  in  employment  and 
payrolls  in  Chicago  manufacturing  industries  beginning  in  Novem- 

141  Reports  of  the  Recorder  of  Deeds  of  Cook  County. 

143  Reports  of  the  Building  Department  of  the  City  of  Chicago. 
J43  Computed  by  the  Chicago  Title  and  Trust  Co. 

144  Annual  reviews  of  the  Economist. 


MAP  OF  CHICAGO 


RESIDENTIAL  LAND  VALUES  PER  FRONT  FOOT 

1931 


FRONT  FOOT  VALUES  IN  DOLLARS 

\mM\  100  AND  OVER 
ElXtt-g  50  TO  99 
EM  26  TO  49 
4  TO  25 


H   ASSESSMENT  OF  LAND  IN 
NTY  BY  J.L.JACOBS 


EPARED  BY  HOMER  HOYT 


FIG.  47 


268 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


ber,  1929,  continued  steadily  almost  without  any  upturn  until  March, 

I933-145 

In  June,  1931,  began  the  debacle  of  the  outlying  banks,  loaded  with 
non-liquid  real  estate,  as  thirty  banks,  including  the  Bain  chain,  closed 

TABLE  XXII* 

DECLINE  IN  PAY-ROLLS  IN  CHICAGO  MANUFACTURING  INDUSTRIES 

BY  MONTHS  FROM  OCTOBER,  1929,  TO  MAY,  1933 

(Monthly  Average,  1925-27=100) 

1929 — October 103 . 9      1931 — October 46 . 8 

November 99 . 4                November 42.4 

December 94 . 5                December 44 . 3 

1930 — January 89 . 5      1932 — January 42 . 8 

February 41.6 

March 39.8 

April 36 . 9 

May 34.9 

June 33-5 

July 28.9 

August 31.0 

September 31.8 

October 32.1 

November 29.7 

December 29 .  i 

i93i— January 59.6      1933— January 28.4 


March  

ym  •  o 
88.4 

April  

87.4 

May        

84.0 

June 

80.7 

July 

73.  2 

August 

71    0 

September 

7O    I 

October 

67   7 

November 

62  8 

December  .  . 

62.2 

February 61.6 

March 61 . 7 

April 60 .  o 

May 58.2 

June 55-5 

July 53-6 

August 52.9 

September 49-4 


February 28.6 

March 25.7 

April 26.4 

May 29.3 

June 32.2 

July 35-2 

August 39.5 

September 39.9 


*  Illinois  Department  of  Labor,  Labor  Bulletin,  p.  143.  Releases,  February  ig-October  20,  1033- 

their  doors.  Meanwhile,  the  total  local  tax  levy  had  increased  from 
$65,000,000  in  1915  to  $290,000,000  in  1930.  More  city  taxes  had  been 
levied  in  the  eight  years  ending  in  1931  than  in  the  entire  period 

J45  Employment  in  manufacturing  industries  for  the  United  States  as  a  whole  declined 
slightly  more  than  the  average  for  all  industries  from  1929  to  the  first  four  months  of  1933, 
the  decline  for  manufacturing  being  42.8  per  cent  and  for  all  industries  40.7  per  cent. 
("Employment  during  the  Depression,"  National  Bureau  of  Economic  Research  Bull.  47 
[June  30,  1933]). 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR 


269 


before  1923,  and  taxes  levied  for  the  year  1930  alone  exceeded  the 
total  amount  collected  from  1830  to  1893.  Most  of  the  burden  of  local 
taxes  fell  upon  real  estate,  and,  to  make  matters  worse,  the  collection 
of  the  1928  taxes  had  to  be  postponed,  as  a  result  of  the  gross  errors  in 
the  original  assessment,  from  a  period  of  prosperity  to  one  of  depression. 
Foreclosures  were  mounting  rapidly,  the  number  increasing  from  5,818 
in  1930  to  10,075  m  I93I  and the  total  value  of  the  trust  deeds  in  which 
suits  were  brought  rising  from  $244,246,577  to  $457,268,689.146  Vacan- 
cies and  delinquencies  in  collections  were  likewise  increasing  rapidly,  as 
Figure  48  shows. 

TABLE  XXIII* 

DECLINE  IN  EMPLOYMENT  AND  IN  PAY-ROLLS  IN 
CHICAGO  MANUFACTURING  IN- 
DUSTRIES, 1929-33 

(Figures  for  the  Month  of  April  of  Each  Year; 
Monthly  Average,  1925-27=  100) 


Year 

Employment 

Pay-Rolls 

IQ27 

IOO  O 

00   O 

1028.  . 

Q7  .  •Z 

88.9 

1929  

IQ2O 

97.8 
OO   Q 

100.5 
86  o 

IQ^I 

74    3 

ro   g 

IQ32 

<?6  i? 

•2£     Q 

IQ-2-? 

40    3 

26  4 

*  Illinois  Department  of  Labor,  Labor  Bulletin,  XII,  No.  7  (Janu- 
ary, 1933),  143-  Release,  May  18,  1933. 

The  forces  of  depression  dealt  even  harder  blows  to  Chicago  real 
estate  in  1932  than  they  had  in  1931.  The  continued  decline  in  wages 
and  employment  until  170,000  families  in  Chicago  were  supported  by 
charity,  and  the  inability  of  the  local  governments  to  pay  their  em- 
ployees, reduced  the  public  buying  power.  By  December,  1932,  pay- 
rolls in  Chicago  manufacturing  industries  had  declined  to  29  per  cent  of 
the  level  of  November,  1929.  Store  and  apartment  rents  continued  to 
decline  throughout  the  year,  and  there  was  an  increase  in  vacancies  and 
in  delinquencies  in  collections.  It  is  estimated  that  40,000  families 
"doubled  up"  or  occupied  apartments  jointly  and  many  thousands  left 
the  city.  The  population  of  Chicago  certainly  failed  to  gain,  and  it 
probably  received  a  setback.  As  gross  rents  of  all  types  of  properties 

146  Computed  by  Quinlan  &  Tyson,  a  prominent  real  estate  firm. 


270 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


were  falling  faster  than  operating  expenses,  the  net  incomes  of  land- 
lords was  reduced  almost  to  the  vanishing-point,  particularly  in  the 
case  of  kitchenette  apartments  requiring  heavy  maintenance  costs. 
Meanwhile,  the  shock  of  outlying  bank  failures  continued  until  March, 
1933,  when  a  total  of  163  banks,  whose  locations  are  indicated  on  Figure 
49,  had  been  closed  in  Chicago.  This  had  a  particularly  depressing 
effect  on  outlying  real  estate,  where  the  gains  in  land  values  had  been 


FACTORS  IN  THE  CHICAGO  REAL  ESTATE  DEPRESSION 
1926  TO  1933 


^PERCENTAGE 'OF DELINQUENCIES 
IN  COLLECTIONS  ON  SOUTH  SIDE 


2,500 


FIG.  48 

greatest,  because  it  meant  the  destruction  of  the  local  institutions  that 
had  hitherto  made  loans  upon  neighborhood  real  estate  and  that  had 
financed  local  merchants.  In  communities  where  all  the  banks  had 
failed,  the  loss  of  confidence  and  the  decline  in  land  values  were  particu- 
larly severe.  Meanwhile,  foreclosures  reached  a  new  peak  in  1932,  ris- 
ing from  10,075  to  15,201  in  number  and  from  $457,268,689  to  $574,- 
589,646  in  amount.147  Trust  deeds  to  the  amount  of  $2,000,000,000  had 
been  involved  in  foreclosure  suits  by  the  end  of  1932,  and  if  allowance 
be  made  for  deeds  that  were  given  by  equity  holders  to  avoid  fore- 

x*7  The  number  of  foreclosures  was  computed  by  the  Chicago  Title  and  Trust  Co.,  the 
amount  of  trust  deeds  foreclosed  upon  by  Quinlan  &  Tyson. 


MAP  OF  CHICAGO 

-SHOWING- 

THE  DECLINE  IN  THE  NUMBER 

OF  CHICAGO  BANKS  OUTSIDE  THE  LOOP 

1929  TO  1933 


LEGEND 

•"»*         O    BANKS  IN  OPERATION  ON  JULY  1,1933 

•  LOCATIONS  OF  BANKS  THAT  WERE 
OPERATING  ON  JULY  1,1929  AND  WERE 
CLOSED  OR  IN  PROCESS  OF  LIQUIDATION 
ON  JULY  1, 1933 


FIG.  49 


272  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

closure,  it  is  probable  that  half  of  the  property  in  Cook  County  will  pass 
into  the  hands  of  mortgage  holders  before  the  end  of  the  depression. 

At  the  beginning  of  the  bank  moratorium  in  March,  1933,  Chicago 
real  estate  was  at  the  lowest  ebb  it  had  been  since  the  beginning  of  the 
downward  trend.  At  that  time  average  apartment  rents  had  declined 
fully  50  per  cent  since  I928.148  The  reduction  in  store  rents  had  varied 
from  40  to  90  per  cent,  depending  upon  the  location.  After  a  period  of 
several  years  in  which  there  had  been  few  cash  sales,  a  number  of  trans- 
actions were  being  made.  A  study  of  127  sales  and  listings  for  small 
homes  and  apartments  in  all  parts  of  Chicago  indicated  that  the  de- 
cline in  the  value  of  improved  properties  from  1928  to  1933  was  50 
per  cent.149  There  was  no  demand  for  vacant  lots  even  in  built-up  areas 
at  any  price,  although  such  parcels  were  offered  for  sale  at  from  75  to 
90  per  cent  below  1928  prices.  Large  apartment  buildings  could  have 
been  bought  at  less  than  half  of  their  original  first  mortgages,  but  there 
were  practically  no  buyers.  Properties  were  being  acquired  by  buying 
individual  bonds  at  discounts  ranging  from  50  to  90  per  cent,  but  the 
evils  of  receiverships  and  the  burden  of  unpaid  taxes  deterred  pur- 
chasers. It  was  almost  impossible  to  borrow  money  on  new  trust  deeds, 
and  where  loans  were  made,  they  sometimes  did  not  exceed  10  per  cent 
of  the  amount  loaned  on  the  same  property  in  1928. 

A  SURVEY  AT  THE  BOTTOM,  MARCH,  1933 

The  improvement  in  business  following  the  bank  moratorium  in 
March,  1933,  may  mark  the  beginning  of  the  end  of  the  worst  phase  of 
the  Chicago  real  estate  depression.  In  the  early  part  of  1933,  however, 
Chicago  land  values  had  reached  the  lowest  level  in  their  recent  decline 
and  accordingly  the  maximum  extent  of  the  drop  from  1928  is  indicated 
by  drawing  a  line  from  the  peak  to  this  point. 

The  full  assessed  value  of  all  the  land  in  Chicago  for  the  year  1931 
was  $2,500,000,000.  This  assessment  was  actually  made  in  1932  and  re- 
flected the  lower  level  of  values  prevailing  at  that  time.  Compared  with 
twenty-five  hundred  independent  appraisals,  this  assessment  seemed  to 
be  equivalent  to  the  full  market  value  of  the  land  at  the  time  it  was 

^  This  is  based  on  the  average  reduction  reported  by  leading  brokers  in  all  sections  of 
Chicago  in  an  unpublished  report  to  the  county  assessor,  J.  L.  Jacobs. 

J49  A  study  made  for  the  county  assessor,  J.  L.  Jacobs. 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR          273 

made.150  Hence  the  decline  in  Chicago  land  values  from  the  $5,000,- 
000,000  level  of  1928  to  the  $2,500,000,000  level  for  the  early  part  of 
1932  was  50  per  cent.  From  the  spring  of  1932  to  the  spring  of  1933  it 
is  estimated  that  a  further  decline  of  20  per  cent  has  occurred,  so  that 
the  value  of  Chicago  land  at  the  beginning  of  1933  was  $2,000,000,000. 

The  reduction  in  land  values  was  by  no  means  uniform.  It  was 
greatest  in  the  case  of  business  property  and  in  high-grade  apartment 
property  in  which  there  had  been  the  greatest  advances,  and  least  in  the 
case  of  cheap  residential  land.  It  was  recognized  that  far  more  land 
was  zoned  for  business  and  tall  apartment  buildings  than  could  be  used 
in  the  near  future,  and  that  land  values  that  reflected  conversion  to  such 
uses  could  not  be  justified.  The  greatest  reductions  in  the  1931  assess- 
ment as  compared  with  the  1928  assessment  were  made  in  these  classes 
of  land,  and  it  is  believed  that  this  represented  the  true  market  situa- 
tion. Table  XXIV,  therefore,  indicates  the  extent  of  the  relative  de- 
cline in  different  types  of  land,  although  the  full  extent  of  the  decline 
would  have  been  even  greater,  as  the  1928  assessed  values  were  about 
25  per  cent  below  the  sales  prices  of  that  time.151 

In  business  properties,  however,  the  decline  varied  greatly  between 
different  locations.  There  was  a  contraction  of  the  profitable  business 
area  in  each  outlying  center,  and  the  best  locations  in  the  center  of  a 
district  maintained  themselves  far  better  than  sites  on  the  fringes. 
Thus  rents  at  the  southwest  corner  of  Sixty-third  and  Halsted  Street 
declined  only  40  per  cent  from  1928  to  1933,  while  the  reduction  in  rents 
on  Halsted  Street  north  of  Sixty-first  Street  or  South  of  Sixty-fifth 
Street  ranged  from  80  to  90  per  cent.152  Similarly,  on  the  west  side  of 
Commercial  Street,  from  Ninety-first  to  Ninety-second  Street,  the 
string  of  chain  stores  held  the  throngs  and  maintained  values,  but  there 
was  a  collapse  of  rents  on  the  opposite  side  of  the  street  and  on  Ninety- 
second  Street.  In  the  Loop,  also,  there  was  a  retreat  from  the  outer 
fringes  to  the  center.  The  Stevens  Hotel  was  too  far  south  to  be  profit- 
able while  the  Civic  Opera  Building  was  too  far  west.  The  Wacker 

*&  Of  these  2,500  appraisals,  approximately  one-half  were  made  by  the  Chicago  Title 
and  Trust  Co.  and  one-half  by  Harry  Cutmore  &  Associates.  The  appraisals  were  made  in 
the  latter  part  of  1931  and  early  part  of  1932. 

«*  As  indicated  by  the  study  of  Herbert  D.  Simpson,  Tax  Racket  and  Tax  Reform  in 
Chicago,  and  by  the  analysis  of  127  properties  made  by  the  writer. 

152  Based  on  local  survey  of  rents  by  writer. 


274 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


Drive  development  was  regarded  as  premature  and  North  Michigan 
Avenue  as  overboomed.  The  wholesale  district  west  of  Wells  Street  was 
adversely  affected  by  the  depression  and  by  the  completion  of  the  Mer- 

TABLE  XXIV* 

AVERAGE  REDUCTION  IN  FULL  VALUE  OF  LAND  FOR  ASSESSMENT  PUR- 
POSES FOR  1931  AS  COMPARED  WITH  1928  FULL  VALUE  ACCORD- 
ING TO  THE  RELATIVE  VALUE  OF  THE  LAND 
(Taking  Average  Values  for  Entire  Maps) 


Range  in  Value  1928  Assessment 

No.  Maps 

Per  Cent, 
1931  as  Com- 
pared with 
1928 

Per  Cent 
Reduction 

$4—  $25  front  foot 

Residential  Land 

23 
32 
40 

3i 
4 

85 
82 

75 
62 

59 

15 
18 

25 
38 
41 

$25  01—  $50  front  foot 

$5o.oi-$ioo  front  foot  
$100.01—  $500  front  foot  

$500  and  up   

Average  all  residential  

74-7 

25-3 

Under  $50  front  foot          

Business  Land 

6 

22 
22 
6l 
12 

I 
I 

58 
63 
63-5 
60 

55 
70 
60 

42 
37 
36.5 
40 

45 
30 
40 

$5o.oi-$ioo  front  foot  
$ioo.oi-$2oo  front  foot  
$2oo.oi-$5oo  front  foot  
$500.01-$!,  200  front  foot  
Loop  —  retail  area 

Loop  —  wholesale  area  

Average  all  business  outside 
Loop         

60.6 
63 
69 

39-4 
37-5 
3i 

Average  including  Loop 

Average  all  types  of  Land  .  . 

*  Unpublished  study  made  by  the  writer  for  the  county  assessor,  J.  L.  Jacobs,  based  on 
the  comparison  of  1928  and  1931  front-foot  values  for  the  entire  city.  The  typical  unit,  or 
"map"  is  an  area  i  mile  wide  and  i£  miles  long,  containing  960  acres  with  streets  and  alleys. 
Some  maps  contain  a  smaller  area  than  this.  The  maps  correspond  exactly  to  the  pages  in 
George  C.  Olcott's  Land  Values  Blue  Books  of  Chicago  as  well  as  to  pages  in  the  land-value  maps 
in  the  assessor's  office. 

chandise  Mart,  which  drew  away  some  of  its  best  tenants.  So  land 
values  on  the  outer  edges  of  the  Loop  declined  from  40  to  50  per  cent, 
while  the  center  of  it  dropped  only  25  to  30  per  cent. 

Outlying  business  centers  were  affected  in  some  cases  not  only  by 


A  NEW  ERA  THAT  FOLLOWED  A  WORLD  WAR         275 

the  depression  but  by  the  growth  of  rival  centers.  The  establishment  of 
branches  of  Loop  department  stores  at  Lake  and  Marion  streets  in  Oak 
Park  and  at  Davis  and  Orrington  streets  in  Evanston  tapped  the  trade 
of  adjacent  Chicago  areas.  The  Madison-Crawford  and  Madison- 
Kedzie  districts  were  unfavorably  affected  on  the  west  and  the  Wilson 
Avenue  and  Howard  Avenue  districts  on  the  north.  Instead  of  attract- 
ing trade  from  the  suburbs,  the  suburbs  in  their  new  satellite  loops  at- 
tracted trade  away  from  the  outer  edges  of  Chicago.  The  cancellation 
of  chain-store  leases  by  bankrupt  concerns,  the  failure  of  banks  that 
had  supported  local  merchants,  the  great  reduction  in  public  buying 
power  as  a  result  of  unemployment,  and  chain-store  competition  that 
bore  severely  upon  the  independent  merchant — all  combined  to  de- 
moralize the  rents  of  commercial  property.  A  great  many  vacant  stores 
were  to  be  seen  on  leading  business  streets,  and  there  was  a  widespread 
delinquency  in  rent  collections.  Landlords  were  satisfied  to  accept  in 
many  cases  whatever  rent  the  tenant  offered,  regardless  of  the  amount 
stipulated  in  the  lease,  for  it  was  considered  better  to  have  the  store 
occupied  at  a  nominal  rent  rather  than  to  have  it  empty. 

The  depression  was  by  no  means  confined  to  store  property.  Home- 
owners had  been  prevailed  upon  to  assume  heavy  mortgages,  and  when 
these  came  due,  many,  notwithstanding  heavy  sacrifices,  could  not  pay 
any  part  of  the  principal.  Thousands  of  small  home-owners  lost  their 
properties  after  having  invested  their  life-savings  to  acquire  a  shelter. 
By  March,  1933,  the  depression  had  driven  down  the  value  of  bunga- 
lows until  there  was  in  most  cases  no  equity  left  above  the  mortgage. 

The  decline  of  values  went  even  farther  in  the  case  of  large  properties. 
Not  only  was  the  equity  of  the  owner  and  the  lien  of  the  second  mort- 
gage successively  made  valueless,  but  finally  the  interest  of  the  scat- 
tered bondholders,  racked  by  receivers  and  burdened  with  tax  charges 
and  foreclosure  fees,  was  reduced  in  value  to  one-third  or  one-half  of 
the  original  obligation. 

After  the  bank  moratorium  in  March,  1933,  there  was  a  rapid  rise  in 
the  price  of  wheat,  corn,  and  securities  in  the  United  States,  and  a 
marked  improvement  in  general  business  conditions.  While  the  influ- 
ence of  inflation  had  been  but  faintly  reflected  in  real  estate  values  if  at 
all  by  the  summer  of  1933,  there  was  a  decline  in  vacancy  rates  for 
apartment  buildings  in  many  sections  of  the  city,  which  is  usually  the 
first  step  in  the  recovery. 


276  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

The  year  1933:  a  turning  point. — The  year  1933  may  not  only  mark 
the  turning-point  of  one  cycle  in  real  estate;  it  may  be  the  year  of 
transition  from  a  century-old  American  policy  of  almost  uncontrolled 
individualism  to  one  of  planned  economy.  Whatever  may  be  the  course 
of  the  future  events  that  are  hidden  from  the  eyes  of  the  present  writer, 
the  history  of  Chicago  land  values  from  1830  to  1933  must  be  regarded 
as  an  example  of  the  doctrine  of  laissez  faire  applied  to  American  condi- 
tions. Here  was  exhibited  an  energy  that  at  times  reached  an  unusual 
pitch  of  intensity,  and  which  produced  in  a  century  a  city  covering  six 
times  the  ground  area  of  Paris  and  rising  in  towers  and  pinnacles  nearly 
as  high  as  the  Eiffel  Tower.  Here  there  was  a  mingling  of  races  and  a 
mobility  of  the  population  with  but  few  parallels  in  the  history  of  the 
world.  Its  growth,  however,  was  accomplished  at  great  social  cost.  Its 
exuberant  periods  of  building,  subdividing,  and  land  speculation  were 
followed  by  the  inevitable  aftermath  of  foreclosures,  bankruptcies,  bank 
failures,  and  losses  of  savings  that  affected  not  only  the  speculators  but 
the  entire  community.  Cheaply  constructed  and  poorly  planned  build- 
ings, a  helter-skelter  development  of  dwellings  and  industries,  and  sub- 
divided tracts  with  sidewalks  overgrown  with  weeds  were  the  products 
of  this  unbridled  individualism.  Great  public  works  were  indeed  under- 
taken and  plans  for  the  improvement  of  the  city  formulated  which  bore 
fruit  in  such  magnificent  achievements  as  the  Michigan  Avenue  and 
Wacker  Drive  developments  and  the  construction  of  the  Outer  Drive 
on  land  pumped  out  of  the  lake,  but  most  of  the  Chicago  lots  were  sub- 
divided and  the  Chicago  buildings  erected  solely  under  the  guidance  of 
a  speculative  profit  motive.  In  this  method  of  its  growth,  Chicago  was 
not  unique.  Such  were  the  characteristic  traits  of  American  develop- 
ment during  the  period  of  rapid  expansion  in  the  past  century. 


PART  II 

ANALYSIS  OF  THE  RELATION  OF  THE  GROWTH 

OF  CHICAGO  TO  THE  RISE  OF  ITS 

LAND  VALUES,  1830-1933 


CHAPTER  VI 

THE  RELATION  BETWEEN  THE  GROWTH  OF  CHICAGO 
AND  THE  RISE  OF  ITS  LAND  VALUES 

In  the  first  part  of  this  work,  the  factors  affecting  Chicago  land  values 
were  presented  in  their  historical  setting,  and  the  emphasis  was  placed 
upon  the  current  background  and  the  qualitative  differences  between 
the  five  major  periods  in  Chicago's  real  estate  history.  In  this  part,  the 
broad  sweep  of  these  forces  through  the  century  will  be  reviewed,  and 
their  behavior  as  revealed  by  statistical  records  analyzed.  From  this 
point  on,  the  quantitative  measurement  of  the  various  factors  will  be 
stressed. 

A.    THE  DEMAND  FOR  CHICAGO  LAND 

i.  The  swarm  of  people. — One  of  the  chief  requisites  for  the  growth 
in  the  volume  of  buildings  in  any  urban  community  is  an  increase  in 
the  number  of  people  dwelling  on  or  near  the  site.  As  the  growth  in  the 
number  of  persons  living  in  a  city  thus  has  a  direct  bearing  upon  the  in- 
crease in  land  values,  the  increase  in  the  population  of  Chicago  is  of 
fundamental  importance  in  this  study. 

The  growth  of  Chicago  in  the  nineteenth  century  has  been  paralleled 
by  that  of  no  other  great  city  of  a  million  population  or  over  in  either 
ancient  or  modern  times.1  In  the  one  hundred  years  that  represent  the 
life-span  of  Chicago,  its  population  increased  from  50  to  3,376,438.  It 
compressed  within  a  single  century  the  population  growth  of  Paris  for 
twenty  centuries.  From  1840  to  1890,  the  rapidity  of  its  development 
outstripped  that  of  every  other  city  in  the  world.  An  insignificant  town 
in  1840,  Chicago  forged  ahead  of  its  older  rivals  in  the  Middle  West  be- 
fore 1880,  as  Table  XXV  shows,  and  by  1890  it  was  the  second  city  in 
point  of  numbers  in  the  United  States.  In  1930  only  London,  New  York 
and  Berlin — all  much  older — contained  more  people.  Nevertheless,  the 
relative  growth  of  the  population  of  Chicago  since  1900  has  not  been 
materially  greater  than  that  of  a  number  of  other  American  cities,  and 

1  Maurice  Halbwachs,  "Chicago,  experience  ethnique,"  Annales  d'histoire  economique  et 
sociale,  IV  (January  31,  1932),  10-11. 

279 


280 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


it  has  been  far  surpassed  by  that  of  Detroit  and  Los  Angeles.2  The 
growth  of  some  of  the  suburbs  of  Chicago  in  the  twentieth  century, 
however,  has  been  comparable  to  that  of  even  those  two  rapidly  grow- 
ing cities.3 

a)  The  growth  of  Chicago  compared  with  that  of  other  American  cities. — 
The  population  growth  of  Chicago  may  be  compared  first  with  that  of 
its  older  rivals  in  the  Middle  West — St.  Louis,  Cincinnati,  and  New 
Orleans — that  were  mainly  supported  by  the  commerce  of  the  Missis- 
sippi River  and  its  branches.  Table  XXV  shows  how  rapidly  Chicago 
outstripped  these  competing  cities  after  the  railroads  entering  Chicago 

TABLE  XXV 

POPULATION  OF  CHICAGO  AND  OTHER  LEADING  CITIES 
IN  THE  MIDDLE  WEST,  1840-1930 


RIVER 

CITIES 

LAKE  ( 

CITIES 

YEAR 

Chicago 

New 
Orleans 

St.  Louis 

Cincin- 
nati 

Pittsburgh 

Cleve- 
land 

Detroit 

1840  
i8<o     . 

4,479 
20,063 

102,193 
116,  375 

16,469 
77,86o 

46,338 
II  5,435 

31,201 
67,863 

6,071 
17,034 

9,102 
21,019 

1860     .  .  . 

100  ,  206 

168,67^ 

160,780 

161  ,044 

77  ,023 

43,417 

45,619 

1870  
1880  
1800.  .  . 

298,977 
503,298 

I  ,008,  570 

191,418 
216,090 
242,039 

310,864 
350,518 
451  ,  770 

216,239 

255,139 
296,908 

139,256 
235,071 

343  ,  904 

92,829 
160,146 
261,353 

79,577 
116,340 
205,876 

IQOO.  .  . 

1,698,575 

287,104 

575,238 

325,902 

451,512 

381,768 

285,704 

IQIO 

2  i8t;  283 

72Q     O7< 

68?    O2Q 

363  ,  tJQI 

^33,00^ 

560,663 

465  ,  706 

IQ20  
IQ3O 

2,701,705 

•3  ,  776,4^8 

387,219 

4^8,  762 

772,897 
821  ,060 

401,247 
4  5  1  ,  1  60 

588,343 
660,817 

796,841 
000,429 

993,678 
1,568,662 

diverted  traffic  from  the  river  ports.  The  same  table  also  shows  the 
more  rapid  growth  of  the  lake  cities,  such  as  Detroit  and  Cleveland,  as 
compared  with  the  river  towns.  Again  the  increase  in  the  population  of 
Chicago  may  be  contrasted  with  that  of  the  cities  on  the  Atlantic  sea- 
board and  the  Pacific  Coast.  Chicago,  as  Tables  XXVI  and  XXVII 
indicate,  is  seen  to  grow  at  a  much  more  rapid  rate  than  the  eastern 
cities,  as  the  tide  of  population  shifted  westward,  but  as  Tables  XXVI 
and  XXVII  show  also,  its  population  gain  since  1900  has  been  far  less 
than  that  of  Los  Angeles  on  the  Pacific  Coast  and  Detroit  on  the  Great 
Lakes.  The  growth  of  Chicago  has  not  been  at  the  expense  of  all  of  its 
rivals,  for  the  direct  water  and  rail  connections  between  New  York  and 
*  See  Table  XXVIII,  3  See  Table  XXIX. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


281 


Chicago  have  been  a  primary  factor  in  the  rise  of  New  York  City  in  its 
struggle  with  Boston  and  Philadelphia. 

b)  Where  did  the  people  come  from? — Where  did  all  these  people  come 
from  and  how  were  they  brought  to  a  spot  which  a  century  ago  was  a 

TABLE  XXVI 
POPULATION  OF  CHICAGO  AND  SEABOARD  CITIES,  1840-1930 


YEAH 

CHICAGO 

ATLANTIC  SEABOAED 

PACIFIC  COAST 

New 
York* 

Phila- 
delphia 

Boston 

Balti- 
more 

San 
Fran- 
cisco 

Los 

Angeles 

Seattle 

1840  
1850  
1860 

4,479 
29,963 
109  ,  206 
298,977 
503,298 
1,098,570 

1,698,575 
2,185,283 
2,701,705 
3,376,438 

39I,H4 
696,115 
1,174,799 
1,478,103 
1,911,698 

2,507,414 
3,437,202 
4,766,883 
5,620,048 
6,930,446 

t 

565,529 
674,022 
847,170 
1,046,964 

1,293,697 
i  ,  549  ,  008 
1,823,779 
1,950,961 

93,383 
136,881 
177,840 
250,526 
362,839 

448,477 
560,892 

670,585 
748,060 
781,188 

102,313 
169,054 
212,418 
267,354 
332,313 
434,439 
508,957 
558,485 
733,826 
804,878 

1  ,6lO 

56,802 
149,473 
233,959 
298,997 
342,782 
416,912 
506,676 
634,394 

4,385 
5,728 
11,183 

50,395 
102,479 
319,198 
576,673 
1,238,048 

1870  
1880 

1,107 

3,533 
42,837 
80,671 
237,194 

315,  3!2 

365,583 

1890  

IQOO     . 

IQIO.  . 

IQ2O  

IQ7O  

*  Corporate  limits  of  1930. 

f  Population  of  1840  did  not  include  a  large  area  annexed  prior  to  1850. 


TABLE  XXVII 

RELATIVE  INCREASE  IN  POPULATION  OF  ELEVEN  LEADING 
AMERICAN  CITIES,  1850-1930 
(1850=100) 


Year 

Chi- 
cago* 

New 

Yorkt 

Detroit 

Los 

Angeles 

Cleve- 
land 

St. 
Louis 

Balti- 
more 

Boston 

Pitts- 
burgh 

Cin- 
cinnati 

New 
Orleans 

1850  

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

1860  
1870  
1880  

356 

Q3Q 

1,  680 

169 
216 
276 

214 
390 
554 

270 
358 
700 

254 
546 
941 

206 
400 

449 

126 
158 
199 

130 
180 
266 

"5 
205 

345 

140 
191 

222 

!45 
165 
186 

1800 

•j  ,370 

360 

980 

3   130 

1  ,537 

579 

257 

327 

259 

209 

I9OO  

5,158 

492 

1,360 

6,362 

2,246 

737 

300 

410 

664 

282 

247 

IQIO  

6,640 
8  188 

671 
800 

2,217 
4,540 

20,000 
35,818 

3,300 
4,700 

881 
990 

330 
433 

490 
546 

789 
716 

316 

35° 

293 
333 

IQ3O  

10,231 

993 

7,470 

76,900 

5,300 

1,054 

476 

570 

985 

392 

37° 

*  Population  within  1933  corporate  limits. 
t  Population  within  1930  corporate  limits. 


dismal  swamp  far  removed  from  the  path  of  settlement?  The  natural 
rate  of  increase  of  the  population  could  not  account  for  so  prodigious  a 
rate  of  growth  in  the  earlier  period.  An  analysis  of  the  sources  of  the  sup- 


282 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


ply  of  population  of  Chicago  shows  that  the  extraordinary  rate  of  gain  in 
the  number  of  persons  residing  within  its  limits  was  the  combined  result 
of  three  main  factors :  immigration  from  Europe,  migration  from  other 

TABLE  XXVIII 

RELATIVE  INCREASE  IN  POPULATION  OF  THIRTEEN  LEADING 

AMERICAN  CITIES,  1900-1930 

(1900=100) 


Year 

Chi- 
cago 

New 

York 

Phila- 
del- 
phia 

De- 
troit 

Los 
Ange- 
les 

Cleve- 
land 

St. 
Louis 

Balti- 
more 

Bos- 
ton 

Pitts- 
burgh 

San 
Fran- 
cisco 

Cin- 
cin- 
nati 

New 
Or- 
leans 

1900    .   ... 

too 

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

IOO 

IQIO  
I92O  
1030  

129 
159 

198 

139 
164 
203 

120 
140 
ISI 

163 
349 
550 

3" 
562 
1,208 

147 

2IO 

233 

119 

133 
143 

no 
144 
158 

119 
133 
139 

118 
130 
148 

122 
I48 
185 

in 
123 
139 

n8 
I3S 
1  60 

TABLE  XXIX 

POPULATION  OF  SOME  CITIES  IN  THE  CHICAGO 

SUBURBAN  AREA  AND  POPULATION  OF  THE  CHICAGO 

SUBURBAN  AREA,  1900-1930 


City  or  Town 

1900 

1910 

1920 

1930 

Cicero    .    . 

16,310 
19,259 
2,806 
3,969 
4,532 
i,34o 
2,300 
1,833 

14,557 
24,978 
4,209 
5,282 
8,033 
2,009 

4,943 
3,168 
16,802 
19,098 
393,214 

44,995 
37,234 
6,167 

6,525 
12,072 

3,383 
7,8i4 
6,694 
55,378 
35,967 
630,594 

66,602 
63,338 
12,203 
10,102 
25,829 
10,417 
15,233 

12,  166 
100,426 

54,784 
1,065,310 

Evanston.    .    .        .    . 

Highland  Park        .    . 

LaGrange  

May  wood  

Park  Ridge  

Wilmette 

Winnetka 

Gary 

East  Chicago              .    . 

3,4n 
242,652 

Suburban  area*  
Cicero    

Relative  Number  1900=100 

IOO 
IOO 
IOO 
IOO 
IOO 
IOO 
IOO 
IOO 
IOO 
IOO 

89 
130 
150 

133 

177 

150 
215 
173 
560 
162 

276 
193 

220 
164 
266 
252 
340 
365 
1,054 
260 

408 
329 
435 
255 
560 

777 
662 
664 
i,  606 
439 

Evanston  

Highland  Park  

LaGrange  

Maywood 

Park  Ridge 

Wilmette  

Winnetka  

East  Chicago  

Suburban  area* 

*  Cook  County  outside  of  Chicago,  Lake,  and  DuPage  counties,  Illinois,  and  Lake  County, 
Indiana. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         283 

parts  of  the  United  States,  and  the  excess  of  Chicago  births  over  deaths. 
Only  a  succession  of  improved  transportation  devices,  combined  with 
the  stimulation  of  the  flow  of  migration,  settled  so  many  people  upon 
this  prairie  site  in  so  short  a  time.  Lake  steamers  and  prairie  schooners 
brought  the  advance  guard  of  the  thirties  and  forties,  but  combined 
ocean  steamers  and  the  newly  completed  railroads  poured  in  the  great 
stream  of  Irish  and  German  immigrants  of  the  fifties,  sixties,  and  seven- 
ties, and  the  same  agencies  of  transportation  opened  up  the  floodgates  of 
southern  European  immigration  beginning  in  the  eighties. 

When  the  European  sources  of  supply  of  adult  man  power  began  to 
fail  altogether  after  the  outbreak  of  the  World  War  and  the  subsequent 
passage  by  the  United  States  of  drastically  restrictive  immigration  laws, 
the  shortage  was  made  good  by  a  migration  of  negroes  from  the  rural 
South,  immigration  from  Mexico,  and  an  increased  flow  of  white  fam- 
ilies into  Chicago  from  other  parts  of  the  United  States.  In  the  mean- 
time, the  growth  of  the  resident  population  from  migration  had  pro- 
vided an  increasing  parent-stock  to  provide  for  a  substantial  gain  by 
natural  increase  and  the  decline  in  the  city  birth-rate  from  27  to  17  per 
thousand  population  was  partly  offset  by  a  decline  in  the  death-rate 
from  15  to  ii  per  thousand  for  the  period  from  1898  to  1931  so  that  a 
substantial  part  of  the  city's  growth  came  from  the  excess  of  births  over 
deaths  within  the  city.  Tables  XXX  and  XXXI  show  the  relative 
amount  contributed  by  each  factor  to  the  city's  growth  in  population. 

c)  Why  did  they  come? — Such  being  the  sources  of  the  Chicago  popu- 
lation, why  did  the  people  come  to  that  particular  spot?  The  oppor- 
tunity to  earn  a  living  in  trade,  manufactures,  banking,  transportation, 
and  professional  and  personal  service  was  of  course  the  reason.  The 
advantage  of  the  site  of  Chicago  as  a  meeting  place  first  of  lake,  river, 
canal,  and  wagon  transportation,  and  then  of  lake  and  rail  carriers  in 
turn,  made  it  the  principal  distributing  and  manufacturing  center  for  a 
valley  containing  the  richest  combination  of  agricultural  and  mineral 
resources  of  the  world  that  was  being  exploited  for  the  first  time.  High- 
er wages  could  be  paid  at  such  a  strategic  site  than  at  other  less  favored 
places,  and  the  concerns  located  there  could  still  undersell  their  com- 
petitors by  virtue  of  lower  shipping  charges.  Packing  plants,  agricul- 
tural implement  works,  stove  factories,  steel  mills,  electrical  generating 
plants,  gigantic  mail-order  houses,  railroad  shops,  clothing  shops, 
wholesale  houses,  banking  institutions,  and  interval  transportation 


284 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


lines — these  were  some  of  the  magnets  that  pulled  this  great  population 
to  Chicago.  In  addition  to  these  industries  there  were  the  retail  stores, 
the  theaters,  the  local  building  trades,  the  schools,  and  the  local  govern- 
mental agencies  that  supplied  the  needs  of  the  resident  population.  The 

TABLE  XXX* 
SOURCES  OF  INCREASE  OF  CHICAGO  POPULATION,  1830-1930 


Increase  in 

Total 

Increase  in 

Increase  in 

White  Popu- 

Increase in 

Decade 

Increase  in 

Foreign-born 

Colored 

lation  from 

Births  over 

Population 

Population 

Population 

Other  Parts 

Deaths 

of  U.S. 

1830—40  

4,4.20 

f 

f 

4OO 

1840—50  

2  <  ,  484 

2,OOO 

1850—60  

70,  243 

j. 

j. 

IO,OOO 

1860-70  

188,717 

QO  ,  I  3  3 

63,000 

3O,OOO 

1870-80 

205  108 

60   302 

QC    OOO 

CQ   OOO 

1880-90 

4.06  66<? 

24.4.    760 

7    7OI 

14.4.    1  06 

IOO   OOO 

1890-1900  

588,725 

137,584 

15,879 

265,262 

170,000 

1900-1910  

468,708 

194,105 

13,953 

48,650 

212,000 

1910-20  

525,422 

24,165 

65,000 

236,257 

200,000 

IQ2O—  3O.  .  . 

674,  733 

36,  571? 

146,000 

2CQ     IC.8 

233,  OOO 

*  Total  population  increase,  increase  in  foreign-born,  and  increase  in  colored  population  are  from  the  U.S. 
Census  figures.  Increase  in  births  over  deaths  computed  from  actual  birth  and  death  statistics  since  1000. 
Figures  for  earlier  periods  estimated  on  basis  of  death-rates  published  since  1867  and  estimated  birth-rate. 
Increase  in  number  of  white  persons  coming  from  other  parts  of  the  United  States  computed  by  subtracting 
other  factors  from  total  population  increase.  The  figures  for  increase  of  births  over  deaths  assume  that  persons 
born  in  Chicago  remain  there  for  at  least  a  decade. 

t  Before  1860  no  accurate  date  is  available  for  increase  in  foreign-born  population.  Increase  in  colored 
population  in  this  period  was  negligible. 


TABLE  XXXI 

PERCENTAGE  OF  TOTAL  INCREASE  OF  CHICAGO  POPULATION  COMING 
FROM  EACH  SOURCE,  1860-1930 


Decade 

Total  Increase 
in  Population 

Increase  in 
Foreign-born 
Population 

Increase  in 
Colored 
Population 

Increase  in 
White  Popula- 
tion from  U.S. 

Increase  in 
Births 
over  Deaths 

1860-70  

IOO 

47  8 

33   4. 

ic  o 

1870-80  

IOO 

2O-4 

46   3 

24  4 

1880-90 

IOO 

40    3 

I   6 

20  o 

2O   I 

1890-1900  
1900-1910  
1910—20  

IOO 
IOO 
IOO 

23-4 
41.4 

4  6 

2.7 
3-0 

12    4. 

45-o 
10.4 

4.e   o 

28.9 
24.2 
38  o 

1920-30  

IOO 

1-4 

21    7 

38  4. 

34    ^ 

magnitude  of  the  population  was  but  the  measure  of  the  strength  of  the 
economic  advantages  of  the  site  of  Chicago,  and  of  the  economic  re- 
sources of  its  hinterland — the  Upper  Mississippi  Valley. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         285 

2.  Increase  in  the  number  of  the  buildings. — The  physical  body  of  the 
growing  city  was  the  buildings  connected  with  transportation  lines, 
sewers,  pavements,  and  water  pipes  that  began  to  spread  over  the 
prairie  as  the  number  of  the  people  grew.  Such  structures  were  erected, 
of  course,  only  because  the  population  in  its  need  for  housing,  stores,  and 
workshops  paid  rent  at  least  high  enough  to  cover  the  operating  costs, 
taxes,  depreciation,  and  interest  on  the  cost  of  construction.  In  fact, 
the  superior  sites  yielded  an  income  not  merely  enough  to  amortize  the 
cost  of  the  improvement,  but  they  also  returned  a  surplus  income  to  the 
owner  of  the  land,  which  formed  the  basis  for  its  value.  The  absorption 
of  vacant  land  in  the  Chicago  region  for  building  purposes  therefore  en- 
abled hitherto  unused  plots  of  prairie  to  pay  ground  rent  to  their  own- 
ers. The  prospect  for  the  continued  growth  of  the  settled  area  gave  a 
speculative  value  to  all  the  nearby  vacant  land.  Hence  the  rate  of 
growth  of  new  construction  and  the  amount  of  vacant  land  required  for 
the  houses,  stores,  factories,  and  schools  of  Chicago  are  the  measures  of 
the  aggregate  demand  for  vacant  land  on  the  edge  of  the  built-up  area 
and  the  source  of  its  value.  Corresponding  to  the  growth  of  the  popula- 
tion of  Chicago,  therefore,  is  the  growth  of  the  number  of  its  buildings. 

The  hamlet  with  twelve  log  cabins  in  1831  had  grown  to  a  metropolis 
with  400,000  buildings  in  1928,  as  Table  XXXII  shows.4 

The  buildings  in  Chicago  in  1933,  exclusive  of  garages,  vary  in  size 
from  a  small  cottage  of  400  square  feet  to  a  structure  with  nearly  4,000,- 
ooo  square  feet  or  50  acres  of  floor  space.  They  vary  in  height  from  low 
one-story  bungalows  to  the  Board  of  Trade  Building  in  the  central  busi- 
ness district  that  rises  to  the  height  of  612  feet  above  the  street  level.5 

4  See  Putney,  op.  cit.,  for  the  years  1825,  1831-37,  1868,  1890;  Goodspeed  and  Healy, 
op.  cit.,  I,  223,  for  the  years  1842,  1851,  1853;  Chamberlin,  op.  cit.,  p.  69,  for  the  years 
1848  and  1857.  J.  L.  Jacobs  (Journal  of  the  Proceedings  of  the  Board  of  Commissioners  of 
Cook  County,  April,  1928,  pp.  1379-80)  gives  the  result  of  the  tabulation  of  all  the  build- 
ings assessed  in  Cook  County  in  1928.  Exclusive  of  sheds  and  garages,  there  was  a  total  of 
360,250  buildings  in  townships  wholly  within  Chicago  and  44,329  buildings  in  townships 
partially  within  Chicago.  Most  of  the  buildings  in  townships  partially  in  Chicago  were  in 
Chicago  and  there  were  some  tax-exempt  buildings.  The  estimate  of  400,000  is  made  by 
the  writer. 

s  The  height  of  the  tallest  buildings  in  Chicago,  measured  from  the  sidewalk  level  to  the 
top  of  the  highest  pinnacle,  is  as  follows: 

Board  of  Trade 612  Mather 519  Furniture  Mart 474 

Chicago  Temple 569  Carbide 500  Medinah  Athletic  Club 471 

Pittsfield 557  LaSalle  Wacker 491  Palmolive 468 

20  N.  Wacker 555  State  Bank  of  Chicago ....  479  Steuben 465 

One  N.  LaSalle 530  Bankers 476  Tribune 462 

Morrison  Hotel 526  Straus 475  Roanoke  Tower 452 

Pure  Oil 523  Willoughby 448 


286 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


They  differ  in  material  and  type  of  construction  from  the  frame  stove- 
heated  houses  to  the  brick  and  stone  elevator  apartments  with  steel 
frames.  They  vary  in  age  from  structures  antedating  the  Chicago  fire 
of  1871  to  buildings  a  year  old.  For  tax-assessment  purposes,  this  con- 
glomeration of  buildings  is  grouped  into  48  major  divisions  with  a  total 
of  288  different  subgroups.6 

a)  Increase  in  the  volume  of  building  space. — Ignoring  the  number  of 
separate  structures  and  considering  merely  the  cubic  contents  of  the 

TABLE  XXXII 

NUMBER  OF  BUILDINGS  IN  CHICAGO  COMPARED  WITH  POPULATION 
AT  INTERVALS  FROM  1825  TO  1928 


Year 

No.  of  Buildings 

Population 

Buildings  per 
1,000  Inhabitants 

l82«;.. 

14. 

1831  

12 

IOO 

1  2O 

1832.. 

3O 

200 

I  CQ 

1833 

180* 

7  r0* 

18^6 

ACQ 

7     82O 

118 

1837 

*y" 

<?i6 

4I7O 

124 

1842 

I      76l 

6  ooo 

227 

1848..  . 

2    742 

20,023 

l87 

1851.  . 

^,708 

7,4,000 

I  7O 

i8S3  
1857  

9,212 
19,008 

59,130 

0  3  ,  OOO 

156 

2OA 

1868 

7Q     766 

2C2    O^4 

IA2 

1860 

47    Q2O 

272    O4  3 

161 

1870 

<2    6lO 

2o8   Q77 

176 

1871 

6  1  ,000 

7  2C    OOO 

186 

1890  
1928  

127,871 

400,000 

1,098,570 
3,402,296 

116 
ix8 

*  Population,  early  part  of  1833;  buildings,  latter  part  of  1833. 

entire  mass  of  buildings,  the  space  inclosed  between  walls  and  roofs  of 
major  buildings  in  Cook  County  increased  from  less  than  200,000  cubic 
feet  in  1830  to  an  estimated  22,000,000,000  cubic  feet  in  1930.7  Of  ap- 
proximately 500,000  buildings  erected  within  the  present  city  limits  of 
Chicago  since  1830,  nearly  400,000  are  still  standing.8  The  replacement 
of  buildings  has  been  small  in  relation  to  the  volume  of  new  construc- 
tion. The  buildings  in  Cook  County  in  the  latter  year  had  a  floor  area 

6  Assessor's  Manual,  Cook  County,  Illinois,  1930. 

"i  Estimated  from  the  number  of  buildings  at  each  period  with  the  average  cubic  content 
of  each  estimated  from  the  records  of  the  assessor's  office. 

8  This  figure  is  obtained  by  adding  the  total  number  of  building  permits  issued  since 
1872  to  the  number  of  buildings  in  existence  in  1870. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         287 

of  approximately  1,600,000,000  square  feet,  which  would  cover  57 
square  miles  to  a  height  of  one  story.  If  streets  and  alleys  are  allowed 
for,  this  quantity  of  construction  would  solidly  fill  all  the  lots  in  83 
square  miles,  and  if  the  rear  half  of  the  lots  were  kept  vacant,  as  is 
usually  the  case,  it  would  spread  over  166  square  miles  on  a  one-story 
level.  On  the  other  hand,  all  of  this  building  space  could  be  put  into 
one  forty-story  building  i|  miles  square  or  into  one  solid  twenty-story 
building  3  miles  square.  Such  a  building,  with  no  space  allowed  for 
light  courts  or  air  shafts,  would  of  course  never  be  built,  but  the  exam- 
ple illustrates  the  possible  range  in  ground  area  that  might  be  covered 
by  the  existing  buildings  in  Cook  County. 

b)  Factors  determining  the  volume  of  building  space. — Neither  the  ag- 
gregate number  of  people  living  on  an  urban  site  nor  the  aggregate 
floor  space  in  the  buildings  is  sufficient  to  determine  the  ground  area 
covered  by  structures.  The  demand  for  land  for  urban  use  is  the  ag- 
gregate demand  of  the  population  for  a  variety  of  uses  such  as  for 
streets,  parks,  homesites,  factory  sites,  stores,  churches,  schools,  gov- 
ernmental buildings,  cemeteries,  and  railroad  rights-of-way.  The 
amount  of  space  required  for  the  principal  uses  enumerated  is  subject 
to  wide  variations.  Thus  the  amount  of  floor  space  required  to  house 
the  population  is  much  less  when  there  is  a  large  proportion  of  single 
men  in  the  city  who  sleep  in  the  rear  of  stores,  or  fourteen  to  a  room,  as 
they  did  in  1836  in  Chicago.  The  amount  of  space  for  residential  pur- 
poses contracts  in  periods  of  depression  when  families  "double  up,"  live 
in  a  single  room  in  an  apartment  and  share  dining-room  and  kitchen  in 
common,  and  it  expands  when  these  families  on  the  return  of  prosperity 
take  separate  apartments.  The  amount  of  space  required  for  dwellings 
is  greater  when  people  live  in  large  rooms  with  high  ceilings  than  when 
they  live  in  one-room  kitchenette  apartments  with  disappearing  beds 
and  gas  ranges,  where  the  one  room  has  the  efficiency  of  three.  Less 
space  is  required  for  a  population  of  childless  couples  than  for  one  with 
children,  and  smaller  quarters  are  needed  when  all  the  children  sleep  in 
one  room  than  when  the  custom  becomes  established  of  having  a  sepa- 
rate bedroom  for  each  child.  The  amount  of  space  required  for  stores 
and  factories  also  varies  with  the  concentration  of  the  business.  A 
heavy  volume  of  trade  or  work  spread  out  over  a  long  period  of  time 
with  day  and  night  shifts  requires  less  store  space  than  a  smaller  vol- 
ume scattered  over  a  wider  area  during  a  shorter  time  interval.  The 


288  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

demand  for  space  for  governmental  buildings  increases  with  the  com- 
plexity of  governmental  functions,  and  the  need  for  space  for  ceme- 
teries increases  with  enlargement  of  the  city's  total  population  and  the 
increase  in  the  number  in  the  older  age  groups;  although  this  demand 
might  cease  almost  entirely  if  the  practice  of  cremation  became  com- 
mon. The  space  taken  for  parks  varies  in  different  cities,  and  the 
amount  of  ground  needed  for  railroads  depends  upon  the  importance  of 
a  city  as  a  railroad  center.  The  area  taken  for  streets  and  alleys  is  far 
less  in  urban  communities  where  the  only  thoroughfares  are  narrow 
lanes  than  it  is  in  cities  where  the  streets  are  wide  or  have  parkways  in 
the  center  and  where  the  blocks  are  short  and  cross-streets  frequent. 

The  number  of  persons  who  live  within  a  given  inclosed  building 
space  thus  varies  with  the  habits,  customs,  and  standards  of  living  of 
the  people.  The  amount  of  ground  occupied  by  a  given  amount  of  floor 
space  or  used  in  conjunction  with  a  given  building  also  varies  greatly. 
The  motto  of  Chicago,  "Urbs  in  horto"  ("City  in  a  Garden"),  once 
meant — in  the  forties  and  fifties — that  nearly  every  family  had  a  garden 
plot  next  to  the  house,  and  for  that  a  lot  50  by  125  feet  was  required. 
Near  the  central  business  district,  however,  by  1858  frame  shacks  were 
crowded  together  and  built  on  both  the  front  and  the  rear  of  the  lot.  A 
mansion  of  a  millionaire  of  the  eighties,  even  in  the  city,  would  contain 
yard  space  enough  to  provide  sites  for  from  ten  to  twenty  of  these  cot- 
tages of  the  poor.9  The  small  cottage  or  bungalow  today,  however,  rare- 
ly occupies  more  than  one-third  of  a  lot,  while  the  large  apartment 
building  occupies  from  75  to  90  per  cent  of  the  ground  space  on  which 
it  stands.  Similarly,  the  small  store  usually  occupies  no  more  than  the 
front  half  of  the  lot,  because  for  most  purposes,  except  for  laundries, 
restaurants,  chain  department  stores,  banks,  or  theaters,  the  deep  store 
no  longer  pays  the  cost  of  maintaining  the  rear  half.  The  large  depart- 
ment store  in  the  Loop,  however,  covers  the  entire  block,  even  the  al- 
leys, to  a  height  of  from  twelve  to  sixteen  stories  and  to  a  depth  of  two 
or  three  basements. 

Not  only  does  the  percentage  of  the  lot  occupied  by  the  building 
range  from  20  to  100  per  cent,  but  the  number  of  floors  superimposed  on 
each  lot  varies  from  one  to  twenty-two  before  the  tower  setback  re- 
quirement lessens  the  floor  area  of  the  space  from  the  twenty- third  to 

9  See  Fig.  50  for  an  illustration  of  this  point. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         289 

the  forty-fourth  floors.  In  the  case  of  tall  kitchenette  apartments,  all 
the  factors  of  concentrated  land  use  are  combined.  The  ground  area  is 
fully  occupied,  the  height  is  carried  to  twenty-two  stories,  and  the 
apartments  are  of  the  one-room  Pullman  type.  This  makes  it  possible 
for  as  many  as  one  hundred  families  to  live  on  the  ground  where  one 
family  lived  in  a  cottage. 

The  intensity  of  utilization,  not  only  of  the  lot  but  also  of  the  block 
or  of  the  neighborhood,  also  fluctuates  within  a  considerable  range. 
Thirty  per  cent  of  all  the  lots  inside  the  city  limits  of  Chicago  were  still 


A  COMPARISON  OF  GROUND  AREA  OCCUPIED  BY  THE  HOUSES  AND  YARDS 

OF  RICH  AND  POOR  FAMILIES  IN  CHICAGO-1886 

tSSSSS  WOOD  CONSTRUCTION  8ggg8  BRICK  CONSTRUCTION 


EASTSIDEOFDES  PLAINES  STREET-POLK  TO  HARRISON  STREETS 
ROBINSWS  ATLAS.  VOL.!,  t>L.i 


EAST  SIDE  OF  PRA/R/E  AVENUE -18  TO  20  STREETS 

ROtlNSOH?  4TLAS.  VOL  /,«..// 


FIG.  50 

vacant  in  1928,  and  there  was  in  1933  a  gradation  from  blocks  with  only 
one  or  two  houses  to  those  which  are  solidly  built  up.10 

c)  Classification  of  buildings  by  type  of  use. — The  percentage  of  the 
land  area  of  Chicago  used  for  the  various  purposes  from  1850  to  1911, 
according  to  statistics  gathered  by  the  Bureau  of  statistics  and  the 
Chicago  Municipal  Reference  Library,  is  indicated  in  Table  XXXIII.11 
In  Table  XXXIV  is  shown  the  utilization  of  land  in  Chicago  in 
1923. 

d)  The  average  height  of  buildings  in  the  Chicago  area. — The  building 
space  in  Cook  County  in  1928  was  distributed  over  approximately  the 

10  In  Chicago  in  1928  there  were  517,086  improved  lots  and  223,126  vacant  lots  (Herbert 
D.  Simpson  and  John  E.  Burton,  The  Valuation  of  Vacant  Land  in  Suburban  Areas:  Chicago 
Area  [Chicago:  Northwestern  University,  1931],  p.  14). 

11  This  table  is  reproduced  from  Dorau  and  Hinman,  Urban  Land  Economics  (New 
York:  Macmillan  Co.,  1928),  p.  146. 


2QO 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


TABLE  XXXIII* 
UTILIZATION  OF  LAND  IN  CHICAGO,  1850, 1870, 1890,  AND  1911 


191 

1.    : 

189 

0 

187 

o 

18 

So 

CLASS  OF  UTILIZATION 

Acres 

Per 
Cent 

Acres 

Per 
Cent 

Acres 

Per 
Cent 

Acres 

Per 
Cent 

Total  area 

I  24  ,  448 

IOO.O 

IIS,  <?2O 

IOO.O 

22,463! 

IOO  O 

8,966 

IOO   O 

Water  area         

4>  2IS 

3  -4 

3  j  29° 

2.9 

385 

i  .  7 

170 

1  .9 

Land  area          

120,233 

96.6 

112,230 

97.1 

22,078 

98.3 

8,796 

98? 

Vacant  land  

37,334 

30.0 

64,  142 

55-5 

9,409 

42.6 

6,338 

70.7 

Utilized  land  

82  ,  899 

70.0 

48,088 

44-5 

12,669 

57.4 

2,458 

29.3 

Publicly  utilized 

30,968 

77.4 

23,  531 

48.9 

^,835 

46  I 

1,682 

68.4 

Streets  and  alleys            .    .  . 

26,368 

31.8 

20,721 

43  .O 

4,  72? 

37  •  3 

1  ,630 

66.3 

Recreational  lands   

4,500 

c.A 

2,77? 

5.7 

1  ,096 

8.7 

CO 

2.  I 

Other  Public  usesj  

IOO 

O.2 

75 

O.2 

14 

2 

Privately  utilized 

eri  ,031 

62  6 

24,  >^7 

CI     I 

6,834 

1  3   Q 

776 

31  6 

Residential 

30,  138 

^6   4 

I  I,  008 

22    O 

3,48l 

27    <C 

46  % 

18  o 

Manufacturing 

0,672 

II   7 

6,  146 

12.8 

I  ,  3^0 

IO.   5 

I2C 

c;  .  ir 

Steam  railroads 

6,9O4 

8.4 

4,  ^OI 

9-4 

I       272 

10.8 

CQ 

2  .  I 

Business§                    .        .... 

3,  2<2 

3  .Q 

1  ,722 

3.6 

C2S 

4-  * 

22 

I  .  2 

Education  and  religious]  |.  .  .  . 
Cemeteries 

850 

I.O 
I    2 

375 
80  q 

0.8 

I    3 

125 

i  .0 

28 
6c 

i.i 

2    7 

*  Based  on  statistics  gathered  by  the  Bureau  of  Statistics  and  Chicago  Municipal  Reference  Library, 
t  Area  reported  for  1870  was  22,823,  but  total  of  items  is  only  22,463,  as  here  given. 
J  Does  not  include  utilization  for  public  education  or  conduct  of  corporate  business. 
§  Includes  a  small  amount  of  publicly  utilized  land. 
1 1  Includes  land  utilized  for  public  education,  etc. 


TABLE  XXXIV* 
UTILIZATION  OF  LAND  IN  CHICAGO  IN  1923 


No.  of  Acres 

Per  Cent  of 
Total  Land  Area 

Total  land  area  

I2O,OOO 

IOO.O 

Vacant 

30,000 

2$    O 

Utilized 

90  ,  ooo 

7?  o 

Utilized: 
Streets  

30,000 

25.0 

Residential  

3o,ooof 

25.0 

Manufacturing  
Business          

16,640 
5,568 

13-8 
4.6 

All  other  uses  

7,  792 

6.5 

*  Chicago  Zoning  Commission  Report  (1923). 

t  This  figure  of  30,000  acres  of  residential  land  in  1923  is  not  consistent 
with  the  figure  of  30,138  acres  given  in  Table  XXXIII  for  the  year  1911,  as 
there  was  a  large  amount  of  vacant  land  absorbed  for  residential  use  be- 
tween 1911  and  1923.  The  two  tables  were  either  computed  in  a  different 
manner  or  else  the  figure  for  1911  is  too  high. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


291 


height  levels  shown  in  Table  XXXVI.12  The  actual  ground  space  oc- 
cupied by  buildings  in  Cook  County  is  thus  18,400  acres,  or  3  per  cent 

of  its  total  land  area. 

TABLE  XXXV* 

NUMBER  OF  BUILDINGS  IN  COOK  COUNTY 
BY  PRINCIPAL  TYPES,  1928 


Type  of  Building 


Residential: 

One-family  dwellings 240, 540 

Two-family  dwellings 145 , 171 

Multi-family  dwellings 40, 249 

Dwellings  with  stores  or  offices 41 , 517 

Hotels 513 

Club  and  lodge  buildings 129 

Total 468,119 

Commercial  buildings: 

Stores 8,963 

Office  buildings 808 

Theaters 345 

Public  garages 3 ,359 

Service  stations i ,  608 

Hospitals 72 

Miscellaneous  commercial i  ,920 

Total 17,075 

Industrial  and  farm  buildings: 

Factories  and  loft  buildings 7 , 130 

Warehouses 286 

Farm  buildings i ,  280 

Total 8,696 

Grand  total 493 , 890 

Private  garages 260,567 

Sheds,  barns,  and  fences 126, 768 

Miscellaneous 53 , 170 

Total 440, 505 

Grand  total 934,395 


No. 


*  J.  L.  Jacobs,  Journal  of  the  Proceedings  of  the  Board  of  Commissioners 
of  Cook  County  (April  28,  1931),  P-  1380. 

12  This  was  computed  in  the  following  manner:  The  number  of  buildings  in  each  of  the 
48  classes  of  the  Assessor's  Manual  was  determined  by  the  actual  count  of  J.  L.  Jacobs  al- 
ready referred  to.  One-,  two-,  and  three-story  buildings  are  separately  given  in  this  classi- 
fication. The  average  number  of  square  feet  in  each  class  was  determined  by  taking  the 
measurements  of  a  number  of  buildings  in  each  class  from  the  records  of  the  county 
assessor's  office.  The  total  number  of  square  feet  for  each  class  was  estimated  by  multiply- 
ing this  average  for  each  building  by  the  total  number  of  buildings. 


292 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


Figure  51  indicates  how  the  Chicago  buildings  are  distributed  as  to 
height.  Most  of  the  tall  buildings  are  along  the  lake  front,  and  the 
height  tends  to  decline  as  one  proceeds  west. 

e)  The  intensity  of  land  utilization  in  Chicago. — As  regards  the  in- 
tensity of  utilization  of  land  for  its  residential  buildings,  Chicago  oc- 
cupies a  middle  ground  between  European  and  smaller  American  cities. 
On  the  one  hand,  it  does  not  possess  the  tenements  or  the  dense  apart- 
ment areas  of  Berlin,  Paris,  and  New  York,  in  which  the  poorer  families 
are  crowded  into  a  limited  space.  On  the  other  hand,  it  is,  relative  to 
population,  not  spread  out  as  much  as  the  smaller  American  cities, 
where  the  majority  of  the  people  reside  in  single-family  dwellings.  One 

TABLE  XXXVI 

SQUARE  FEET  OF  BUILDING  SPACE  AT  VARIOUS  HEIGHT 
LEVELS  IN  COOK  COUNTY,  1928 


Height 

Square  Feet 

Acres 

Per  Cent 

First  story 

800  ,  ooo  ,  ooo 

18,400 

5° 

Second  story 

480  ,  ooo  ,  ooo 

I  I  ,  OOO 

3° 

Third  story 

i  80  ,  ooo  ,  ooo 

4,000 

ii 

Fourth  story  and  higher 

140,000,000 

3,400 

9 

Total  

i  ,  600  ,  ooo  ,  ooo 

36,800 

IOO 

striking  characteristic  of  Chicago  is  the  two-apartment  building,  or  the 
"two  flat,"  in  which  one-third  of  the  population  dwelt  in  1930.  As  com- 
pared with  30  per  cent  of  the  Chicago  population  occupying  "two 
flats,"  in  sixteen  self-contained  American  cities  with  an  aggregate 
population  of  1,583,187,  only  10.44  per  cent  of  the  population  lived  in 
two-family  dwellings  in  IQ30.13  In  these  smaller  cities,  on  the  other 
hand,  78.6  per  cent14  of  the  people  occupied  single-family  residences  as 
compared  with  19.4  per  cent  for  Chicago.15  Finally,  in  the  smaller 

Js  Figures  for  smaller  American  cities:  Harland  Bartholomew,  Urban  Land  Uses  (Cam- 
bridge: Harvard  University  Press,  1932),  pp.  38,  60.  The  smaller  cities  were  Knoxville, 
Tenn.;  Vancouver,  B.C.;  San  Angelo,  Tex.;  Fort  Worth,  Tex.;  Cape  Girardeau,  Mo.; 
Sacramento,  Calif;.  San  Jose",  Calif;  Springfield,  Mo.;  Cedar  Rapids,  Iowa;  Tulsa,  Okla.; 
Louisville,  Ky.;  Peoria,  111.;  Jefferson  City,  Mo.;  San  Antonio,  Tex.;  Troy,  Ohio;  and 
Binghamton,  N.Y. 

*4  Ibid.,  pp.  28,  60. 

«  Chicago  Association  of  Commerce,  Survey  of  Business  Research  Bureau  (January  i, 
1931).  This  figure  included  625,000  living  in  single-family  homes,  37,5°°  living  in  single- 
family  homes  in  the  rear  of  stores,  and  6,500  living  in  single-family  homes  over  stores. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


293 


cities,  only  7.6  per  cent  of  the  people  lived  in  multi-family  buildings16 
compared  with  48.4  per  cent  for  Chicago.17  The  average  population 
density  of  Chicago  within  areas  occupied  for  residential  uses  was  100 

AIR  SPACE  OCCUPIED  BY  BUILDINGS  IN  CHICAGO-1933 
BB9  SPACE  OCCUPIED  BY  BUILDINGS  AT  VARIOUS  HEIGHT  LEVELS 
K%%3  VACANT  AREA  AT  VARIOUS  HEIGHT  LEVELS 
STORIES  ARE  COMPUTED  ON  THE  BASIS  OF  THE  AVERAGE  HEIGHT  OF  12  FEET 


10 


20 


30          40  50  60  70 

PERCENT  OF  TOTAL  GROUND  AREA 


80 


90 


100 


FIG.  51 

per  acre  in  1923  ;l8  the  average  population  density  of  the  residential  land 
in  the  smaller  American  cities  in  1930  was  34.4  per  acre.19 

The  area  of  Chicago,  however,  is  widely  extended  in  proportion  to  its 

16  Ibid.,  pp.  44,  60. 

*?  Chicago  Association  of  Commerce,  op.  cit.  This  included  500,000  persons  living  in 
three-flat  buildings,  800,000  in  apartment  buildings  larger  than  three-flat  buildings,  325,000 
living  in  apartments  over  stores,  and  36,000  living  in  apartments  in  the  rear  of  stores. 

18  On  the  basis  of  the  Chicago  Zoning  Report  estimating  30,000  acres  used  for  residential 
purposes  in  1923  and  the  writer's  estimate  of  3,000,000  for  the  population  of  Chicago  in 
1923. 

19  Bartholomew,  op.  cit.,  p.  61. 


294  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

population  as  compared  with  other  metropolitan  cities  of  similar  size. 
If  its  people  were  distributed  evenly  over  its  land  surface,  there  would 
be  only  28  persons  to  the  acre.  Paris  occupies  only  15  per  cent  as  much 
ground,  and  its  density  of  population  is  nearly  six  times  as  great  as  that 
of  Chicago.20  Thus  the  space  contained  within  the  walls  of  buildings  in 
Cook  County,  Illinois,  which  could  be  put  in  one  forty-story  building 
ij  miles  square,  or  in  six-story  buildings  occupying  28  square  miles, 
or  in  one-story  buildings  covering  166  square  miles,  actually  averages 
two  stories  in  height.  Allowing  for  streets  and  alleys  and  for  yard  spaces 
covering  half  the  lot,  these  buildings  would  use  83  square  miles  of 
ground.  The  intensity  of  utilization  of  the  land  by  buildings  varies 
from  the  Loop,  where  the  average  height  of  buildings  is  eleven  stories, 
and  where  the  ground  occupying  less  than  one-tenth  of  i  per  cent  of 
the  area  of  Cook  County  has  6  per  cent  of  the  floor  space  of  Cook 
County,  to  the  bungalow  areas  where  only  27  per  cent  of  the  lot  is 
utilized  by  a  residence  that  is  one  story  in  height.21  Finally,  not  only 
were  30  per  cent  of  the  lots  in  Chicago  vacant  in  1928,  but  another  con- 
siderable area  was  occupied  by  parks,  cemeteries,  railroad  rights-of- 
way ,  school  grounds,  and  airports,  where  but  a  small  part  of  the  ground 
area  was  occupied  by  buildings. 

The  corporate  limits  of  a  city  may  be  extended  to  include  wide  tracts 
of  vacant  ground  and  even  of  farm  lands.  The  amount  of  the  vacant 
area  between  the  main  settled  area  of  a  city  and  the  invisible  line  of 
the  city  limits  that  in  modern  cities  is  marked  by  no  wall  or  line  of 
fortifications  has  little  bearing  upon  the  density  of  urban  population. 
Of  much  more  importance  is  the  density  of  population  in  the  developed 
tracts  or  the  amount  of  intervening  vacant  land  between  houses  within 
the  main  settled  areas.  Chicago  has  not  grown  in  a  compact  body,  be- 
cause new  transportation  lines  made  it  possible  to  pass  over  old  areas 
that  were  partly  built  up  in  favor  of  virgin  tracts  that  were  not  marred 
by  obsolete  buildings,  and  because  the  cupidity  of  owners  frequently 
caused  them  to  raise  prices  of  land  adjoining  new  improvements  to 
prohibitive  figures.  Rather  than  pay  such  advanced  prices  for  land, 
builders  tended  to  jump  several  blocks  ahead  into  another  area.22 

^Halbwachs,  op.  cit.,  p.  15. 

21  The  average  bungalow  contains  1,000  square  feet  of  floor  space  and  occupies  a  lot  with 
3,750  square  feet  of  ground  (records  of  the  assessor's  office  of  Cook  County). 

22  Clifford  Bechtel  in  an  interview  with  the  writer  stated  that  this  was  the  cause  of  the 
scattered  nature  of  the  development  on  Wabash  Avenue  south  of  Roosevelt  Road. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         295 

B.  THE  SUPPLY  OF  CHICAGO  LAND 

i.  The  practical  limit  to  the  supply  of  Chicago  urban  land. — The  in- 
crease in  the  number  of  people  living  in  Chicago  and  in  the  amount  of 
building  space  occupied  by  them  thus  required  the  utilization  of  in- 
creasing amounts  of  land  for  building  sites.  What  has  been  the  amount 
of  ground  surface  in  the  Chicago  area  that  has  been  available  to  meet 
this  demand  for  additional  ground-floor  area?  The  total  ground  sur- 
face of  the  United  States  is,  of  course,  almost  absolutely  fixed  by  na- 
ture. The  entire  area  of  the  land  within  the  city  limits  of  all  the  cities 
in  the  United  States  of  over  30,000  population  in  which  over  45,000,000 
people  resided  in  1930  is,  however,  only  one-fifth  of  i  per  cent  of  the 
land  area  of  the  United  States.  Even  after  allowing  for  indispensable 
farm  land  and  for  land  not  easily  accessible  to  existing  cities,  it  is  ap- 
parent that  the  upper  limit  imposed  by  the  physical  surface  of  the 
United  States  is  a  very  distant  one  when  the  possibilities  of  urban  ex- 
pansion are  being  considered.  The  practical  limit  to  the  supply  of  urban 
land  is  set  not  by  the  total  land  surface  of  America  but  by  the  amount 
which  is  accessible  to  people  working  at  a  certain  strategic  spot.  The 
supply  of  the  urban  land  area  and  of  the  air  space  above  the  ground  in 
Chicago  has,  in  fact,  been  greatly  increased  in  the  past  century  by  pro- 
jection of  rapid-transit  facilities  outward  from  the  center  and  the  up- 
ward extension  of  steel-frame  skyscrapers.  The  time  and  expense  re- 
quired to  go  from  the  center  of  the  city  outward  or  upward,  and  not 
physical  extension,  determines  the  effective  supply  of  urban  land. 

a)  Lateral  expansion  by  more  rapid  transportation. — Accessible  build- 
ing space  in  Chicago  in  1833  was  the  ground  and  the  layer  of  air  above 
the  ground  to  a  height  of  about  50  feet,  within  walking  distance  over 
dirt  roads  to  the  main  channel  of  the  Chicago  River.  Outward  exten- 
sion began  with  plank  roads  and  street  railway  lines.  Omnibuses  and 
horse  cars  which  traveled  at  a  rate  of  6  miles  an  hour  instead  of  a  walk- 
ing pace  of  3  miles  an  hour  doubled  the  radius  of  settlement.  Cable 
cars  in  the  eighties,  with  a  speed  of  12  miles  an  hour,  doubled  the  radius 
again  along  trunk  lines.  Suburban  steam  railroads  and  elevated  elec- 
tric lines,  traveling  at  from  25  to  30  miles  an  hour,  again  doubled  the 
radius  of  settlement  along  their  routes. 

The  universal  adoption  of  the  automobile  with  a  possible  speed  on 
superhighways  of  60  miles  an  hour  has  enabled  the  worker  to  go  twenty 
times  farther  from  his  factory  to  his  home  in  an  hour  than  he  could  in 


296  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

1836.  The  airplane  extends  the  possible  range  from  home  to  office  to 
150  or  200  miles,  although  the  location  as  well  as  the  expense  of  landing 
fields  greatly  limits  the  general  use  of  the  air  as  a  means  of  suburban 
transportation. 

The  effect  of  doubling  the  radius  of  the  settled  area,  if  the  settlement 
is  carried  to  a  full  circle,  is  not  merely  to  double  but  to  quadruple  the 
original  area,  for  the  area  of  a  circle  is  obtained  by  multiplying  a  con- 
stant factor  TT  by  the  square  of  its  radius.  This  rate  of  increase  of  area 
applies  as  well  to  a  half-circle  as  to  a  full  circle.  Therefore  as  the  in- 
creased speed  of  transportation  has  tapped  a  widening  area  on  the 
outer  edge  of  the  city,  the  amount  of  land  made  available  has  increased 
at  a  rate  greater  than  the  increase  in  the  length  of  track.  The  amount 
of  new  land  has  not  increased  by  the  square  of  the  distance  added  by  the 
new  lines,  because  the  supply  of  land  so  added  has  been  confined  to 
belts  along  the  lines  themselves  and  there  are  intervening  spaces  be- 
tween these  radial  lines  that  are  less  accessible.  The  supply  of  available 
ground  sites  in  Chicago  has  been  further  limited  by  the  lake  on  the  east, 
which  prevented  the  development  of  Chicago  in  a  full  circle  from  the 
center,  and  caused  the  city  to  expand  farther  to  the  west  and  south  than 
it  would  otherwise  have  grown. 

b)  The  extension  into  the  air. — In  addition  to  this  extension  outward, 
there  has  been  an  extension  upward  and  downward.  While  the  ground 
area  of  the  city  increased  twenty  fold  from  1833  to  1933,  the  possible 
air  space  that  could  be  occupied  by  buildings  increased  tenfold.  The 
elevator  and  steel-frame  skyscraper  rising  successively  from  nine, 
twelve,  sixteen,  twenty-two,  to  forty-four  stories  tapped  the  horizontal 
layers  of  air  100,  150,  250,  and  over  500  feet  above  the  ground  level.23 
At  the  same  time  the  raising  of  the  level  of  the  central  business  district 
of  Chicago  from  15  to  20  feet  prior  to  1859  enabled  basements  to  be 
built.  Taller  buildings  called  for  deeper  foundations  and  deeper  base- 
ments until  today  in  the  Chicago  Loop  there  is  an  average  of  over  one 
floor  underground.  The  supply  of  land  available  for  Chicago  has  been 
further  increased  by  accretions  along  the  lake  shore.  The  Municipal 

23  The  zoning  law  of  1923,  which  permitted  the  construction  of  towers  above  the  twenty- 
two-story  level,  fixes  no  absolute  height  limit  but  provides  that  the  tower  part  shall  occupy 
not  over  one-fourth  of  the  lot  and  that  the  space  contained  in  it  shall  not  exceed  one-sixth 
of  the  entire  building.  On  a  lot  large  enough  a  one-hundred-and  fifty-story  tower  would 
be  possible,  but  the  size  of  the  lots  so  far  utilized  in  the  Loop  have  limited  buildings  to  a 
height  of  forty-five  or  forty-six  stories  (Chicago  Zoning  Ordinance,  par.  2 id). 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         297 

Pier,  the  land  in  Streeterville,  Grant  Park,  the  Outer  Drive,  have  all 
been  "made"  by  filling  in  along  the  lake  shore.  Finally,  the  legal  con- 
cept of  horizontal  layers  of  air  which  could  be  separated  from  the  title 
to  the  ground  has  created  a  great  volume  of  building  space  over  rail- 
road tracks.  Supported  by  piers  over  such  railroad  yards  is  the  Mer- 
chandise Mart,  the  largest  building  in  the  world.  A  few  more  such 
gargantuan  buildings  could  house  the  entire  wholesale  business  of  Chi- 
cago. A  further  large  potential  supply  of  land  would  be  made  available 
by  rebuilding  the  blighted  areas. 

Thus  the  supply  of  urban  ground  and  air  space  that  could  be  reached 
within  an  hour's  ride  or  by  prevailing  construction  methods  in  Chicago 
has  so  increased  in  the  past  century  that  there  is  no  scarcity  of  air  space 
for  skyscrapers.  If  built  up  to  the  limits  permitted  by  the  present  zon- 
ing regulations,  it  is  estimated  that  the  entire  population  of  the  United 
States  could  be  housed  in  the  city  limits  of  Chicago.24  Such  intensive 
utilization  of  land  would,  however,  require,  the  erection  of  steel-frame 
apartment  skyscrapers  in  all  the  areas  zoned  for  such  use,  and  the  added 
construction  expense  of  so  tapping  these  higher  air  levels  is  the  cost 
of  acquiring  this  increased  supply  of  space. 

C.    CAUSES  OF  DIFFERENCES  IN  LAND  VALUES  WITHIN  CHICAGO 

i.  The  land-value  contour  map. — Up  to  this  point,  the  factors  affect- 
ing the  aggregate  demand  for  Chicago  building  sites  have  been  con- 
sidered without  reference  to  the  distribution  of  different  types  of  uses 
and  of  different  degrees  of  intensity  of  each  use  within  the  city.  Even 
if  the  total  land  value  of  an  urban  region  be  determined  by  the  popula- 
tion mass  and  by  the  combined  rent  roll,  the  distribution  of  that  ag- 
gregate land  value  between  the  different  areas  of  the  city  is  still  un- 
known. If  the  land  values  in  Chicago  were  shown  in  the  form  of  a  re- 
lief map,  in  which  the  elevations  represented  high  land  value,  a  picture 
of  startling  contrasts  would  be  disclosed.  In  the  center  would  be  the 
Himalaya  Mountain  peaks  of  the  Loop,  but  on  all  sides  except  along  a 
high  ridge  running  north  along  the  lake  there  would  be  a  descent  into 
the  deep  valleys  of  the  blighted  areas.  Gradually,  as  one  went  farther 
from  the  center,  the  elevation  would  begin  to  rise.  Along  the  lake,  both 
north  and  south,  would  be  a  high  ridge  which  slopes  down  sharply  as 

2*  Estimate  made  in  an  unpublished  study  by  the  Chicago  Regional  Planning  Associa- 
tion. 


298  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

one  goes  west.  Beginning  5  or  6  miles  from  the  center  of  the  city,  there 
would  be  a  plateau  several  miles  wide  encircling  the  city  that  is  up- 
tilted  toward  the  lake,  on  top  of  which  were  high  ridges  a  mile  apart 
that  culminated  in  towering  pinnacles  at  each  intersection.  If  a  dollar 
a  front  foot  in  land  value  were  represented  by  i  foot  in  height  on  this 
map,  the  changes  in  elevation  within  the  211  square  miles  of  Chicago's 
area  would  be  greater  than  the  differences  in  physical  elevation  of  any 
part  of  the  land  surface  of  the  globe,  for  the  variation  would  be  the 
same  as  from  5  to  50,000  feet  above  sea-level.  Within  a  little  over  a 
mile  one  might  drop  from  an  altitude  of  50,000  feet  to  one  of  50  feet,25 
and  within  a  short  block  a  person  could  fall  from  an  elevation  of  4,000 
feet  to  one  of  25  feet.26  What  is  the  explanation  of  this  unusually  abrupt 
change?  Why  is  it  that  when  one  passes  from  one  street  to  the  next 
land  values  rise  or  fall  precipitously  in  some  cases,  while  in  other  areas 
there  are  wide  plains  of  substantially  equal  land  values? 

The  land- value  pattern  of  a  city  that  is  illustrated  throughout  this 
book  by  land- value  maps  and  by  numerous  charts  is  naturally  of  the 
greatest  importance,  particularly  in  a  city  like  Chicago  where  such  tre- 
mendous differences  in  land  values  exist.  To  explain  the  land-value 
structure  of  a  city  and  the  causes  of  the  variations  in  value,  it  is  neces- 
sary to  go  back  to  the  beginning  of  the  history  of  a  city,  to  trace  the 
manner  in  which  each  section  of  the  city  started  to  develop,  and  to  show 
the  direction  of  growth  of  different  types  of  uses.  That  was  one  of  the 
main  purposes  of  the  first  part  of  this  book.  It  is  now  necessary  to 
bring  the  threads  of  that  discussion  together,  and  to  illustrate  by  a 
series  of  charts  and  maps  the  course  of  progression  during  the  entire 
century  of  the  major  factors  causing  differences  in  land  values  between 
different  sections  of  the  city  in  order  that  the  separate  effect  of  each 
factor  may  be  demonstrated. 

When  Chicago  was  a  marshy  plain  entirely  unimproved,  who  could 
tell  which  spot  would  sometime  be  passed  by  several  hundred  thou- 
sand people  daily  and  which  one  would  be  in  the  heart  of  a  slum?  On 
that  lot  where  a  cow  is  grazing  a  forty-story  building  will  rise.   There 
where  that  pig  is  rooting  will  be  a  huge  bank  building.   Go  a  short  dis- 
tance away  from  this  magic  spot  and  the  soil  is  just  as  good,  the  grass 
just  as  green,  but  the  ground  the  cows  trod  on  there  is  doomed  to  pro- 
's From  State  and  Madison  Street  to  Townsend  Street  near  Chicago  Avenue. 
26  From  Forty-seventh  and  Ashland  Avenue  to  Forty-sixth  and  Laflin. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         299 

duce  nothing  but  shacks,  gangsters,  and  land  values  that  do  not  cover 
the  cost  of  the  street  improvements.  Miles  farther  away  from  the  heart 
of  the  city  there  is  land  on  which  men  will  shoot  snipe  and  plover  for 
many  decades  after  the  city  is  founded  that  will  surpass  in  value  this 
ground  that  is  so  close  to  the  city's  center.  What  establishes  the  lines 
of  cleavage  between  areas  of  intensive  utilization  and  high  land  values 
and  those  less  favored  districts  that  will  be  thinly  settled  and  used  for 
purposes  that  yield  low  returns?  Where  will  the  main  retail  shopping 
area  be  located?  What  tracts  will  be  selected  for  high-grade  residential 
use  or  tall  apartment  buildings?  What  corners  will  be  the  center  of  an 
outlying  business  subcenter?  What  regions  will  command  a  premium 
for  factory  sites?  These  are  the  grand  prizes.  The  person  who  could 
select  these  spots  in  advance  will  reap  a  fortune.  The  other  areas — the 
tracts  occupied  by  the  poor  and  middle  classes,  the  low-grade  outlying 
business  locations,  and  the  poorer  industrial  land — will  yield  a  profit  to 
those  who  first  develop  them  from  farm  land.  Once  such  districts  are 
improved  with  mediocre  dwellings  and  filled  with  tenants  who  rank  low 
in  purchasing  power,  and  there  is  little  hope  for  a  further  rise  in  land 
value.  Owners  of  vacant  farm  land  on  the  city's  edge  have  then  a  far 
better  chance  to  reap  the  "unearned  increment." 

In  tracing  the  causes  of  the  great  differences  in  land  values  between 
different  sections  of  the  city,  some  of  the  main  factors  to  be  considered 
are  the  topography  of  Chicago,  the  origin  and  direction  of  movement  of 
different  types  of  uses,  the  points  of  settlement  and  lines  of  expansion  of 
different  races  and  nationalities,  and  the  extent  of  vertical  as  con- 
trasted with  lateral  expansion  of  high  land-value  areas. 

2.  Physical  causes  of  land-value  variations. — Three  main  factors  in 
the  topography  of  Chicago  have  affected  the  pattern  of  its  land  values: 
the  lake  on  the  east ;  the  Chicago  River  and  its  two  branches,  forming  a 
Y  with  its  base  on  the  lake,  and  a  broad  level  plain  west  of  the  lake  that 
interposes  no  barriers  to  lateral  expansion. 

a)  The  effect  of  the  lake. — As  has  been  noted,  Chicago  is  situated  on 
the  west  side  of  Lake  Michigan  near  its  southern  tip.  The  lake  pre- 
vented any  appreciable  growth  on  the  east,  and  forced  Chicago  to  ex- 
pand more  to  the  north,  south,  and  west  than  it  would  otherwise  have 
done.  As  the  lake  curves  toward  the  east  as  it  proceeds  southward  from 
the  northern  to  the  southern  limits  of  Chicago,  the  area  available  for 
settlement  likewise  expands  as  one  goes  south,  so  that  the  lake  cuts  off 


3oo  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

less  than  half  of  the  arc  of  a  full  circle  with  a  radius  of  eight  miles  from 
the  center  of  the  city.  The  lake  also  prevents  the  entry  of  highways  and 
railroads  directly  from  the  east,  but  compels  them  to  come  into  Chicago 
from  the  south  around  the  bend  of  the  lake.  The  lake  finally  provides 
what  has  lately  come  to  be  regarded  as  the  "front  yard"  of  Chicago, 
and  land  facing  the  lake  has  acquired  the  highest  value  for  residential 
purposes.  In  the  pre-railroad  era,  the  lake  was  one  of  the  principal 
avenues  of  approach  to  the  city. 

b)  The  effect  of  the  river. — The  Chicago  River  and  its  branches  divide 
Chicago  into  its  three  main  divisions — the  North,  South,  and  West 
sides — and  thus  sets  up  a  barrier  that  caused  the  somewhat  independ- 
ent development  of  each  section.    At  the  same  time,  by  affording  a 
meeting  place  of  lake,  river,  canal,  and  railroad  traffic,  it  provided  dur- 
ing the  first  part  of  the  city's  history  the  medium  for  binding  together 
the  separate  parts  of  the  city's  commercial  and  industrial  life.  Both 
sides  of  the  Chicago  River  were  lined  with  elevators,  factories,  ware- 
houses, and  lumber  yards;  and  from  the  point  of  view  of  water  com- 
merce, it  mattered  little  in  which  division  of  the  city  a  factory  on  the 
river  bank  happened  to  be.  The  difficulties  of  crossing  the  river  in  early 
days,  first,  because  of  the  scarcity  of  bridges  and,  later,  because  of  their 
frequent  opening  and  closing,  proved  to  be  very  serious  obstacles  to  the 
unity  of  the  three  sections  of  Chicago.  The  separation  of  the  three  sec- 
tions was  further  accentuated  by  the  mode  of  development  of  the  trans- 
portation systems.   From  the  time  of  the  first  horse-car  lines  in  1859 
to  the  cable  lines  of  1881  and  the  elevated  lines  of  1892-1900,  each  sec- 
tion of  the  city  virtually  had  an  independent  system  of  transportation 
leading  to  the  central  business  district,  with  no  transfer  points  or  en- 
circling connecting  system  outside  the  downtown  area.  Hence  each  sec- 
tion has  had  a  different  rate  of  growth  and  a  different  land- value  history. 

c)  The  Chicago  plain. — The  Chicago  plain  affords  practically  un- 
limited room  for  urban  growth  to  the  west,  south,  and  north.  The  few 
slight  elevations  that  rise  above  it  are  at  a  premium  for  residential  use, 
and  there  are  no  bluffs,  steep  hills,  or  ravines  to  prevent  the  even 
spreading  of  new  buildings  over  the  prairie.    If  the  three  sections  of 
Chicago  that  are  caused  by  the  configurations  of  the  Chicago  River  are 
considered,  however,  the  amount  of  land  available  for  use  as  one  pro- 
ceeds in  square-mile  belts  from  the  center  of  the  city  varies  considerably. 
Thus  in  the  south  division,  the  south  branch  of  the  Chicago  River  which 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         301 

splits  off  from  the  main  channel  less  than  a  mile  west  of  the  lake  curves 
eastward  for  its  first  two  miles,  forming  a  narrow  bottle  neck  at  Eight- 
eenth and  State  streets  and  limiting  the  available  land  area  on  the 
South  Side  within  two  miles  from  State  and  Madison  streets  to  about 
one  square  mile.  As  the  south  branch  and  the  Illinois-Michigan  and 
Drainage  canals  turn  southwesterly  beyond  Twenty-second  Street,  the 
South  Side  broadens  out  to  cover  an  ever  increasing  territory.  The  area 
of  the  North  Side  is  confined  by  the  north  channel  of  the  river  to  a  strip 
from  two  to  three  miles  along  the  lake  shore,  and  the  land  available  for 
settlement  within  the  first  two  miles  from  State  and  Madison  streets 
was  only  about  two  square  miles.  On  the  West  Side,  however,  the  land 
area  widens  out  both  north  and  south,  and  within  the  first  two  miles 
from  the  center  of  the  city,  over  five  square  miles  were  available  for  oc- 
cupation. Hence  the  West  Side  provided  the  space  for  the  greatest  ex- 
pansion of  population  when  horse-car  transportation  limited  the  radius 
of  city  growth  to  a  few  miles  from  the  center. 

d)  The  three  sections  of  the  city. — The  growth  of  the  three  sections  of 
the  city  has  proceeded  at  different  rates  in  the  various  periods.  The 
south  division  had  the  advantage  in  the  fact  that  the  land  trails,  rail- 
roads, and  highways  from  the  centers  of  population  in  the  East  and 
South  entered  the  city  through  that  section,  and  from  the  first  it  at- 
tracted the  central  business  section.  In  the  forties  and  fifties,  the 
North  Side,  in  the  district  south  of  Chicago  Avenue  near  the  present 
Michigan  Boulevard,  contained  some  of  the  finest  homes,  but  in  the 
period  following  the  Civil  War,  the  growth  of  the  fashionable  sections 
on  the  South  Side  was  rapid.  The  West  Side  developed  early  as  an  in- 
dustrial and  manufacturing  area,  and  as  factory  workers  settled  near 
their  places  of  employment,  its  population  growth  prior  to  1873  ex- 
ceeded that  of  other  sections.  From  the  great  fire  of  1871  to  the  World's 
Fair  of  1893,  the  development  and  rise  of  land  values  on  the  South  Side 
outstripped  that  of  the  other  divisions  of  the  city,  but  after  the  panic 
of  1893  it  went  into  an  eclipse,  and  shortly  thereafter  the  North  Side 
and  the  north-shore  suburbs  attracted  the  leaders  of  fashion.  From 
1900  to  1929  the  North  and  Northwest  sides  as  a  whole  recorded  more 
rapid  gains  in  land  values  than  any  other  entire  section  of  the  city. 
After  1873  the  old  West  Side  east  of  Ashland  Avenue  and  south  of 
Chicago  Avenue  languished  as  a  residential  area,  although  the  expan- 
sion of  industry  absorbed  part  of  its  space. 


302  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

3.  The  growth  of  different  types  of  land  uses. — In  all  three  sections  of 
the  city,  however,  areas  devoted  to  the  different  types  of  uses  developed 
near  the  common  junction  point  of  the  divisions  and  grew  away  from 
this  center  in  direct  lines  south,  west,  and  north. 

a)  The  fashionable  residential  areas. — Fashionable  or  high-grade  resi- 
dential areas  were  started  with  the  building  of  large  homes  or  mansions 
on  ample  grounds,  with  carriage  and  servant  quarters  in  the  rear.  These 
sections  were  located  on  the  avenues  adjacent  to  the  best  transporta- 
tion lines  leading  directly  to  the  central  business  district,  and  in  the 
beginning  they  were  located  within  a  few  blocks  of  the  principal  shops 
and  stores.  Thus,  as  Figure  52  shows,  on  the  North  Side  the  finest  resi- 
dential section  in  the  forties  and  fifties  was  on  Cass  and  Rush  streets 
near  Ontario  Street,  on  the  West  Side  it  was  on  Washington  Street  east 
of  Halsted  Street,  and  on  the  South  Side  it  was  first  on  Washington 
Street  and  then  on  Wabash  and  Michigan  avenues  within  the  confines 
of  the  present  Loop.  From  1860  to  1873,  with  the  first  horse-car  lines  in 
all  sections  and  the  first  suburban  railroad  service  on  the  South  Side, 
the  North  Side  fashionable  area  shifted  to  Dearborn  and  LaSalle 
streets  and  expanded  from  Chicago  Avenue  to  Lincoln  Park  along  those 
streets.  The  West  Side  high-grade  area  grew  westward  along  Washing- 
ton Street  to  Union  Park  at  Ashland  Boulevard,  and  the  development 
also  proceeded  westward  along  Monroe,  Adams,  and  Jackson  streets  to 
Ashland  Boulevard.  Ashland  Boulevard  was  laid  out  as  a  fashionable 
street  and  the  first  homes  were  erected  on  it  at  this  time.  On  the  South 
Side  the  fashionable  growth  had  proceeded  south  from  Washington 
Street  along  Wabash  and  Michigan  avenues,  and  at  Eighteenth  Street 
had  swung  eastward  to  Indiana,  Prairie,  and  Calumet  avenues  and  was 
projected  southward  along  these  avenues  as  far  as  Twenty-sixth  Street. 
Thus  by  1873  three  main  bands  of  fashionable  growth,  four  to  six 
blocks  wide,  had  been  developed  like  spokes  of  a  half -wheel.  The  va- 
cant lots  on  these  avenues  for  several  miles  beyond  the  settled  portions 
had  acquired  values  which  reflected  the  anticipated  high-grade  resi- 
dential use.  The  continuation  of  the  fashionable  areas  in  straight-line 
projections  along  these  avenues  was  favored  by  the  placing  of  a  belt  of 
large  parks  in  the  direct  path  of  growth,  several  miles  beyond  the  fash- 
ionable settled  area,  and  the  development  of  boulevards  leading  from 
the  high-grade  areas  to  these  parks.  A  vanguard  of  fashionable  sub- 
urban settlements,  like  Kenwood  on  the  South  Side  and  Pine  Grove 


MAP  OF  CHICAGO 

-SHOWING- 

EXTENSION  OF 
AREA  OCCUPIED 

BY 

HIGH  GRADE  RESIDENTIAL 

OR 

APARTMENT  BUILDINGS 
1833-1933 


AREAS  OF  NEW  GROWTH  BY  PERIODS 

LEGEND 

•Bi    BEFORE  1857 
Egjgjj    1857  TO  1873 
P^l    1874  TO  1899 
1900  TO  1933 


FIG.  52 


3o4  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

on  the  North  Side,  also  guarded  areas  beyond  from  the  intrusion  of  un- 
desirable elements.  The  exclusion  of  saloons  from  these  chosen  spots 
also  preserved  their  high-grade  character.  Pushed  by  the  growth  of  the 
business  of  the  city  from  the  rear  and  attracted  by  the  lure  of  parks, 
boulevards,  and  fashionable  suburbs  ahead,  rows  of  fine  homes  were 
built  north,  south,  and  west  down  the  "avenues"  in  ever  lengthening 
lines.  In  each  section  of  the  city  there  was  a  sharp  line  of  demarcation 
between  the  fashionable  belt  and  the  slums  that  almost  directly  ad- 
joined it.  On  the  North  Side  the  dividing  line  was  Wells  Street,  on  the 
South  Side  it  was  State  Street,  and  on  the  West  Side  it  was  Randolph 
Street  or  Lake  Street  on  the  north  and  Harrison  Street  on  the  south. 
In  the  eighties,  Prairie  Avenue  between  Eighteenth  and  Twentieth 
Street  was  the  center  of  Chicago's  most  aristocratic  homes.  At  this 
time  Michigan  Avenue  was  growing  rapidly  as  a  place  of  residence  for 
Stock  Yards  magnates.  On  the  West  Side,  Ashland  Boulevard  from 
Madison  to  Harrison  streets,  and  Jackson  Boulevard  east  of  Ashland 
Boulevard,  were  in  their  heyday.  The  Lake  Shore  Drive,  then  known  as 
"Potter  Palmer's  frog  pond,"  was  just  beginning  to  develop . 

(1)  The  decline  of  Prairie  Avenue. — After  the  first  World's  Fair, 
Prairie  Avenue  on  the  South  Side  began  to  decline  rapidly  in  impor- 
tance, as  the  segregated  vice  area  was  by  that  time  only  a  few  blocks 
west  of  it.  On  the  North  Side  the  movement  away  from  Dearborn  and 
LaSalle  streets  to  the  Lake  Shore  Drive  gained  momentum  and  the 
North  Shore  "Gold  Coast"  began  to  emerge  as  the  social  capital.   On 
the  West  Side,  Ashland  Boulevard  had  passed  its  peak,  and  the  growth 
of  fine  homes  was  now  taking  place  along  Washington  Boulevard  in  the 
vicinity  of  Garfield  Park.    On  the  South  Side  those  social  leaders  who 
did  not  migrate  to  the  North  Side  moved  farther  out  to  Grand  and 
Drexel  boulevards  and  the  Kenwood  district.  There  was  thus  an  east- 
ward shift  of  the  fashionable  home  area  of  the  South  Side.  The  avenues 
from  State  Street  east  to  Grand  Boulevard  began  to  be  filled  in  with 
apartment  buildings  which  gave  a  more  intensive  use  to  the  land,  but 
did  not  cause  its  value  to  rise  beyond  the  values  already  anticipated  be- 
cause of  the  expected  extension  of  the  fashionable-home  area.  The  land- 
value  changes  of  these  different  areas  are  shown  in  Figure  53. 

(2)  The  lake  front  grows  in  importance. — Finally,  in  the  twentieth 
century,  and  particularly  after  the  World  War,  the  relative  value  of 
land  along  the  lake  shore  compared  with  land  away  from  the  lake  great- 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


305 


ly  increased.  At  first,  land  fronting  on  the  lake  was  not  considered  so 
attractive  because  of  the  lake  storms  that  sent  spray  dashing  across  the 
streets,  because  of  the  undeveloped  nature  of  the  sandy  wastes  along 

FLUCTUATIONS  IN  THE  VALUE  OF 
FASHIONABLE  RESIDENTIAL  LAND,  1865- 1933 

DEARBORN  STREET  NEAR  GOETHE  STREET       ASHLAND  BOULEVARD  NEAR  MONROE  STREET 

MICHIGAN  BOULEVARD  NEAR  It  STREET  PRAIRIE  AVENUE,  FROM  18  STREET  TO  20  STREET 

LAKE  SHORE  DRIVE,  SOUTH  OF  DIVISION  STREET 

3000 


2100 


iaoo 


2    1500 


1200 


FIG.  53 

the  lake  front,  and  because  sewage  was  dumped  directly  into  the  lake. 
While  Michigan  Avenue  within  the  present  Loop  was  occupied  by 
fashionable  homes  in  the  forties  and  fifties,  Wabash  Avenue  in  the  same 
vicinity  was  preferred  to  Michigan  Avenue  because  it  did  not  face  the 


LAND  VALUES  IN  OUTLYING  HIGH  GRADE  AREAS 
DEVELOPED  AFTER  1900 

AREA  BOUNDARIES:  ROGERS  PARK  -HOWARD, LAKE  MICHIGAN,  DEVON,  ASHLAND 
SOUTH  SHORE-67,  YATks,  71,  STONEY  ISLAND 
AUSTIN  -CHICAGO,CENTRAL,MADISON,  AUSTIN 

67  AND  CICERO  -79,  CRAWFORD,  87,  CICERO 


87  AND  CICERO  AREA  WAS  NOT  DEVELOPED   IN  THIS  ENTIRE  PERIOD 


FIG.  54 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         307 

lake  storms,  and  as  the  expansion  of  the  area  proceeded  southward  on 
a  straight  line,  it  grew  farther  from  the  lake.  On  the  North  Side,  land 
on  the  lake  shore  south  of  Chicago  Avenue  was  occupied  first  by  the 
settlement  occupied  by  disorderly  persons  known  as  the  "Sands"  and 
later  it  became  the  precinct  of  Captain  Streeter,  the  celebrated  squat- 
ter. The  growth  of  the  fashionable  north-shore  towns  along  the  lake, 
beginning  even  in  the  sixties,  and  the  building  of  Sheridan  Road  and  of 
North  Side  elevated  lines  had  caused  the  North  Side  fashionable  de- 
velopment to  get  started  along  the  lake  front  at  many  points.  On  the 
South  Side  the  colored  influx  into  the  old  fashionable  area  in  the  ave- 
nues from  State  Street  east  to  Grand  Boulevard  and  farther  east  to  Cot- 
tage Grove  Avenue  forced  the  fashionable  settlement  to  turn  eastward 
to  the  lake  front.  On  the  South  Side,  also,  the  advantages  of  Jackson 
Park  and  the  Illinois  Central  suburban  transportation  along  the  lake 
front,  which  was  considered  the  best  in  the  city,  also  gave  higher  value 
to  the  lake-front  lots.  Not  the  least  in  importance,  however,  was  the 
turning  of  sewage  away  from  the  lake,  the  development  of  bathing 
beaches,  and  the  completion  of  outer  drives,  which  permitted  automo- 
biles to  speed  along  the  lake  front  without  stopping  for  cross-streets. 
Automobile  traffic  reaches  its  heaviest  concentration  along  the  lake 
shore  and  this  is  both  a  cause  and  effect  of  high  land  values  for  resi- 
dential purposes,  for  it  has  a  maximum  of  transportation  advantages. 
Finally,  in  the  era  from  1922  to  1929,  fringes  of  tall  apartment  build- 
ings were  erected  along  the  lake  shore  on  the  North  Side  from  Chicago 
to  Howard  Avenue  and  on  the  South  Side  from  Fifty-first  to  Seventy- 
fifth  streets.  This  intensive  land  use  made  possible  high  land  values. 
As  Figure  3627  shows,  practically  all  of  the  tall  apartment  buildings  in 
Chicago  are  along  the  lake  shore,  and  those  along  Michigan  and  Cot- 
tage Grove  avenues  not  so  located  were  built  in  the  boom  of  1890  to 
1892.  Thus,  as  illustrated  by  Figures  55  and  56,  a  cross-section  of  resi- 
dential land  values  from  the  lake  westward  indicates  that  not  only  do 
land  values  slope  upward  toward  the  lake,  but  that  the  differential  be- 
tween the  value  of  land  near  the  lake  and  that  farther  away  greatly  in- 
creased from  1910  and  I928.28  The  reason  for  these  higher  land  values  is 
to  be  sought  not  merely  in  the  more  intensive  use  of  land  as  evidenced 
by  tall  apartment  buildings,  but  also  in  the  higher  rents  paid  for  the 

2">  See  pp.  308-9. 

28  Based  on  George  C.  Olcott's  Land  Values  Blue  Books  of  Chicago  (1910  and  1928). 


308 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


same  space.  In  1933  apartments  on  the  Gold  Coast  on  the  north  shore 
of  the  lake  rented  for  fifty  dollars  a  month  per  room,  while  apartments 
away  from  the  lake  rented  for  as  low  as  five  dollars  a  month  per  room. 


RESIDENTIAL  LAND  VALUES 

ONE  BLOCK  NORTH  OF  DIVISION  STREET 

LAKE  MICHIGAN  TO  LARAMIE 

1910  AND  1928 


FIG.  55 

While  there  is  a  considerable  difference  in  the  quality  of  construction  in 
the  two  cases,  this  would  by  no  means  account  for  the  tenfold  difference 
in  rents. 

The  land  along  the  lake  shore  in  Chicago  has  thus  come  to  be  utilized 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


3°9 


for  the  highest  and  most  intensive  residential  types  of  development. 
The  fringe  of  land  on  the  eastern  edge  of  Chicago  was  held  at  too  high  a 
price  and  was  too  limited  in  amount  to  provide  space  for  the  two-  and 


RESIDENTIAL  LAND  VALUES 

SOUTH  SIDE-BETWEEN  55  AND 56  STREETS 

FROM  LAKE  MICHIGAN  TO  CRAWFORD  AVENUE 

1910  AND  1928 


FIG.  56 

three-story  apartment  buildings  known  as  "walk-ups"  because  they 
have  no  elevators,  which  house  over  half  of  the  population  of  Chicago. 
Accordingly,  these  apartment  districts  spread  westward  from  the  lake 
just  beyond  the  old  settled  areas  in  the  period  from  1910  to  1928  and 
they  filled  in  vacant  tracts  between  old  suburban  towns  along  the  rail- 


310  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

roads.  The  two  major  axes  of  these  developments  were  Lawrence  Av- 
enue on  the  North  Side  and  Seventy-ninth  Street  on  the  South  Side, 
which  were  the  business  streets  of  a  rapidly  growing  area  contiguous 
to  them.  At  the  same  time,  on  the  West  Side,  the  old  high-grade  belt 
between  Washington  and  Jackson  boulevards  spread  out  fan-shaped 
west  of  Cicero  Avenue  to  include  Oak  Park  and  Austin.  Thus  by  1933, 
as  Figure  52  shows,  the  high-class  residential  areas  of  Chicago  include 
a  belt  of  land  running  continuously  along  the  north  shore  far  beyond 
the  city  limits,  which  spreads  out  fanwise  and  runs  westward  on  both 
sides  of  Lawrence  Avenue,  another  belt  running  along  the  lake  front 
from  Fifty-first  Street  southward  to  the  beginning  of  the  factories  at 
South  Chicago  at  Seventy-ninth  Street,  where  it  curves  westward  along 
Seventy-ninth  Street  to  Ashland  Avenue  (see  land- value  maps),  and 
the  West  Side  high-grade  area  that  spreads  out  west  of  Cicero  Avenue, 
with  Madison  as  its  center  line.  There  are  also  high- value  residential 
areas  on  the  South  Side  along  the  Rock  Island  Railroad  in  Englewood 
and  Beverly  Hills.  The  higher-grade  residential  land  is  thus  located 
not  only  near  the  lake,  the  parks,  and  the  best  transportation  lines,  but 
when  new  developments  were  made  away  from  the  lake,  they  tended  to 
take  virgin  prairie  tracts  that  were  not  marred  by  old  and  obsolete  im- 
provements or  by  an  undesirable  class  of  people. 

While  the  development  of  faster  means  of  transportation,  such  as 
cross-town  electric  surface  cars,  elevated  extensions,  or  electrified  rail- 
roads, thus  permitted  the  fashionable  residential  neighborhoods  to  push 
farther  away  from  the  center  of  the  city,  the  old  mansions  on  Prairie 
Avenue,  LaSalle  Street,  Washington  Boulevard,  and  Ashland  Boule- 
vard were  being  converted  into  boarding-houses  or  light  manufacturing 
establishments,  or  were  being  torn  down  to  make  room  for  factories  or 
warehouses.  Michigan  Boulevard  lots  on  the  South  Side  for  a  time  ac- 
quired a  value  for  use  for  automobile  showrooms  that  even  exceeded  at 
some  points  the  values  they  formerly  possessed  for  fashionable  resi- 
dential use,  the  expansion  of  the  Loop  northward  gave  a  speculative 
market  for  old  boarding-house  property  on  the  near  North  Side  which 
raised  it  above  the  former  peaks,  and  the  growth  of  factories  westward 
from  the  Chicago  River  revived  the  values  of  old  residential  areas  there. 
As  Figure  53,  shows,  however,  the  decline  of  these  once  fashionable 
residential  areas,  when  their  mansions  become  obsolete,  is  not  neces- 
sarily followed  by  a  new  type  of  use  that  restores  the  former  value. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         311 

b)  Cheap  residential  areas. — Land  areas  in  Chicago  occupied  by  the 
unskilled  and  semi-skilled  laboring  classes  must  necessarily  comprise  a 
greater  amount  of  ground  than  those  sites  used  for  the  abodes  of  the 
wealthy  or  middle  classes,  because  the  poorer  groups  in  society  are  more 
numerous  and  because,  in  Chicago,  they  tend  to  live  in  cottages  or  two- 
apartment  buildings  rather  than  in  tenements.  While  in  the  eighties 
and  nineties  the  rich  occupied  with  their  mansions  lots  that  would  hold 
ten  or  twenty  houses  of  the  poor,  today  the  reverse  is  true.  The  rich 
live  in  tall  elevator  apartments,  and  the  poor  tend  to  occupy  a  small 
house  with  yard  space.  Nevertheless,  prior  to  1929  the  wealth  and  in- 
come of  all  classes  in  American  society  had  so  increased  that  the  cheapest 
residential  land,  or  that  less  than  fifty  dollars  a  front  foot,  while  com- 
prising a  considerable  area,29  was  worth  in  the  aggregate  far  less  than 
the  higher-grade  residential  or  business  land. 

Like  the  fashionable  areas,  these  poorer  areas  had  their  points  of 
origin  and  their  lines  of  progression.  Workingmen's  cottages  tended  to 
grow  up  in  all  sections  of  the  city  between  the  belts  of  fashionable  land 
and  the  industries  and  factories  along  the  Chicago  River.  They  filled 
in  the  spaces  not  wanted  for  industries  or  for  high-grade  residences. 
The  tracts  they  occupied  were  close  to  the  noise  and  dust  of  factories 
but  not  directly  contiguous  to  water  or  rail  transportation.  Such  sites 
were  poorly  provided  with  street  improvements  and  with  surface-car 
transportation.  The  people  who  remained  in  such  neighborhoods  were 
the  lowest  in  economic  status,  intelligence,  and  ambition  since  the 
more  progressive  elements  tended  to  move  to  better  neighborhoods  as 
soon  as  possible.  Located  often  near  railroad  yards  or  terminals,  they 
suffered  from  proximity  to  the  vagrant  population  of  tramps  and  home- 
less men.  Foreign  colonies  tended  to  locate  in  such  sections,  because 
they  were  nearest  to  the  railroad  stations  at  which  they  first  arrived  in 
the  city,  because  they  found  their  fellow-countrymen  there,  and  be- 
cause the  quarters  there  were  the  cheapest  and  no  worse  than  those  to 
which  many  of  them  were  accustomed  in  Europe.  The  buildings  in 
such  areas  are  seldom  replaced,  because  when  the  cheap  character  of  a 
residential  neighborhood  is  once  thoroughly  established,  builders  pre- 
fer to  invest  their  labor  and  materials  in  sections  that  have  not  yet  ac- 
quired an  adverse  character.  Consequently,  as  the  survey  of  the  Chi- 
cago Plan  Commission,  based  on  the  insurance  atlases,  shows,  prac- 

2'  See  land-value  maps  for  the  different  periods. 


3i2  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

tically  all  of  the  buildings  in  these  so-called  blighted  areas  were  forty  or 
more  years  old  in  1933. 

The  manner  in  which  the  cheaper  residential  areas  were  extended, 
and  in  which  acre  tracts  in  advance  of  them  reflected  the  cheap  use  to 
which  they  would  ultimately  be  put,  has  a  history  as  well  as  the  mode  of 
growth  of  the  fashionable  avenues.  On  the  North  Side  patches  of 
shacks  early  developed  west  of  Wells  Street  near  the  industrial  plants 
along  the  river.  The  factories  and  carshops  on  the  West  Side  caused 
workingmen's  boarding-houses  to  spring  up  along  Lake  Street  near 
Halsted.  The  factories  and  lumber  yards  along  the  river  resulted  in 
workingmen's  settlements  in  the  near  West  Side,  down  Roosevelt  Road 
and  Blue  Island  Avenue.  On  the  South  Side,  Irish  laborers  settled  at 
Bridgeport  in  1848  after  working  on  the  canal.  The  section  in  the  down- 
town area  west  of  Wells  Street  and  south  of  Madison  Street  was  a  vice 
area  in  the  fifties  and  sixties,  and  when  it  was  cleared  out  by  the  fire 
of  1871,  these  elements  of  the  population  established  a  new  center  of 
saloons  and  vice  dens  west  of  State  Street  and  south  of  Harrison.  A 
colored  population  in  this  same  area  moved  after  a  fire  in  1874  to  Dear- 
born and  Federal  streets  south  of  Twenty-second  Street.  Between  then 
and  1915  the  colored  belt  had  extended  down  to  Thirty-ninth  Street, 
but  it  was  confined  in  the  region  west  of  State  Street  to  the  Rock  Island 
tracks.  Meanwhile,  the  segregated  vice  area  after  1893  became  con- 
centrated in  the  vicinity  of  Eighteenth  to  Twenty-second  street,  from 
State  Street  to  Dearborn,  where  it  remained  until  1912,  when  it  was 
abolished  by  a  reform  movement. 

Thus  the  cheaper  and  poorer  residential  sections  moved  in  lines  of 
progression  from  the  downtown  areas  even  as  did  the  fashionable  areas. 
Another  factor  entered  into  the  situation  after  the  great  fire  of  1871. 
This  was  the  tendency  of  the  working  classes  to  build  wooden  houses — 
the  only  kind  they  could  afford — in  a  belt  around  the  settled  parts  of 
the  city  just  beyond  the  fire  limits.  This  belt  was  broken  at  those 
points  where  it  came  into  contact  with  the  bands  of  fashionable  resi- 
dential land,  however,  for  the  high  speculative  values  at  which  these 
tracts  were  held  precluded  their  use  as  homes  for  unskilled  laborers. 

(i)  Expansion  of  racial  and  nationality  groups. — From  1900  to  1929 
there  began  an  expansion  of  racial  and  national  groups  in  these  old 
areas.  The  new  immigration  from  Poland,  Russia,  Italy,  and  Czecho- 
slovakia had  displaced  the  older  Irish,  German,  and  Scandinavian  ele- 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         313 

ments  in  the  sections  near  the  present  Loop  even  by  1900,  and  they 
had  formed  close,  compact  colonies  near  the  downtown  area.  An  ex- 
pansion of  these  races  now  began  to  take  place  along  definite  paths. 
The  Jews  from  their  ghetto  east  of  Halsted  Street  on  Maxwell  moved 
westward  between  Roosevelt  Road  and  Sixteenth  Street  to  Douglas 
Park  and  beyond.  The  Italians  north  of  Roosevelt  Road  and  east  of 
Halsted  Street  expanded  westward  between  Harrison  and  Roosevelt 

FLUCTUATIONS  IN  THE  VALUE  OF  CHEAP  RESIDENTIAL  LAND 
CHICAGO,  1890-1931 


1890  1895  1900  1905  1910  7575  1920  1925  1930  1935 


FIG.  57 

Road  to  Cicero  Avenue  and  beyond,  and  another  colony  of  Italians 
near  Grand  Avenue  east  of  the  north  channel  of  the  river  proceeded 
westward  along  Grand  Avenue.  The  Poles  on  the  North  Side  moved 
from  their  original  base  near  Chicago  and  Milwaukee  avenue  along  the 
line  of  Milwaukee  Avenue  to  Irving  Park  Boulevard,  and  the  Poles  on 
the  South  Side  expanded  their  section  southwest  from  the  Stock  Yards. 
The  Czechoslovakians,  who  had  originally  settled  near  Eighteenth  and 
Blue  Island  Avenue,  moved  down  Blue  Island  Avenue  to  Twenty- 
second  Street  and  thence  west  on  that  thoroughfare  to  Cicero  and 
Berwyn.  Meanwhile,  a  great  influx  of  colored  workers  from  the  South, 


314  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

beginning  during  the  World  War,  had  burst  the  barrier  that  confined 
their  race  west  of  State  Street  and  filled  the  territory  to  Cottage  Grove 
Avenue  on  the  east  and  Sixty-seventh  Street  on  the  south.  Another 
segment  of  colored  people  penetrated  the  old  area  along  Lake  Street  as 
far  west  as  Western  Avenue.  Figure  58  shows  the  extent  of  the  area  oc- 
cupied by  these  groups  in  IQ33.30 

The  significance  of  these  racial  and  national  movements  upon  Chi- 
cago land  values  lies  in  the  fact  that  certain  racial  and  national  groups, 
because  of  their  lower  economic  status  and  their  lower  standards  of 
living,  pay  less  rent  themselves  and  cause  a  greater  physical  deteriora- 
tion of  property  than  groups  higher  in  the  social  and  economic  scale. 
Because  of  the  instability  of  the  tenants,  high  collection  losses,  and  the 
aversion  of  persons  higher  in  the  social  order  to  living  near  these 
classes,  the  rents  received  are  capitalized  at  higher  rates,  so  that  they 
yield  lower  capital  values  than  property  yielding  the  same  net  in- 
come in  the  most  desirable  areas.  Land  values  in  areas  occupied  by 
such  classes  are  therefore  inevitably  low.  Part  of  the  attitude  re- 
flected in  lower  land  values  is  due  entirely  to  racial  prejudice,  which 
may  have  no  reasonable  basis.  Nevertheless,  if  the  entrance  of  a  col- 
ored  family  into  a  white  neighborhood  causes  a  general  exodus  of  the 
white  people,  such  dislikes  are  reflected  in  property  values.31  Except  in 
the  case  of  negroes  and  Mexicans,  however,  these  racial  and  national 
barriers  disappear  when  the  individuals  in  the  foreign  nationality 
groups  rise  in  the  economic  scale  or  conform  to  American  standards  of 
living.  Hence,  the  classification  given  below  applies  only  to  members  of 
the  races  mentioned  who  are  living  in  colonies  at  standards  of  living 
below  those  to  which  most  Americans  are  accustomed.  While  the  rank- 
ing given  below  may  be  scientifically  wrong  from  the  standpoint  of  in- 
herent racial  characteristics,  it  registers  an  opinion  or  prejudice  that  is 
reflected  in  land  values;  it  is  the  ranking  of  races  and  nationalities  with 
respect  to  their  beneficial  effect  upon  land  values.  Those  having  the 

3°  This  map  is  based  on  U.S.  Census  tracts  and  reports  of  real  estate  rental  agents.  See 
map  by  Halbwachs,  op.  cit. 

3*  This  phenomenon  seems  strange  to  a  foreign  observer.  "II  s'est  produit  alors  un 
phenomene  tres  curieux.  Des  que  les  negres  ont  r6ussi  a  prendre  pied  dans  quelques 
maisons,  alors,  dans  toute  la  rue,  sur  une  longueur  de  4  ou  5  km.,  quelquefois  de  7  ou  de  8, 
les  maisons  vident,  les  appartements  deviennent  vacants,  les  blancs  disparaissent,  cedant 
la  place  aux  nouveaux  venus"  (ibid.,  p.  22). 


MAP  OF  CHICAGO 

-SHOWING- 
AREA  OCCUPIED  BY 

PREDOMINANT  RACIAL  OR  NATIONALITY  GROUPS 

1933 


LEGEND 

NEGRO 

ITALIAN 

POLISH 

JEWISH 

CZECHOSLOVAKIAN 


1 


FIG.  58 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


most  favorable  come  first  in  the  list  and  those  exerting  the  most  detri- 
mental effect  appear  last.32 
i.  English,  Germans,  Scotch,  Irish,  Scandi- 


6.  Greeks 

7.  Russian  Jews  of  the  lower  class 

8.  South  Italians 

9.  Negroes 
10.  Mexicans 


navians 

2.  North  Italians 

3.  Bohemians  or  Czechoslovakians 

4.  Poles 

5.  Lithuanians 

While  precise  information  on  rents  between  different  racial  and  na- 
tional groups  is  lacking,  Table  XXXVII  shows  that  native  whites  rank 
highest  and  negroes  lowest  in  the  average  amount  of  rents  paid. 

TABLE  XXXVII* 

PERCENTAGE  OF  TOTAL  RENTED  HOMES  OF  EACH  GROUP  IN 
CHICAGO  FALLING  WITHIN  GIVEN  RENTAL  CLASS,  1932 


Rent 

Native  White 

Foreign-born 
White 

Negro 

Under  $30  

1C   7 

•22   7 

36    2 

$30—  $49  

24   3 

26  8 

20-  3 

$'\O~$74. 

37  6 

27    3 

2C    C 

$7C—  $QQ 

132 

8   0 

6  i 

$100  or  over 

7    2 

37 

o  8 

Not  reporting 

2   O 

I    c 

2    I 

Total  

IOO  O 

IOO   O 

IOO   O 

*  Department  of  Commerce,  Bureau  of  Census,  release,  September  7, 1932. 

The  entire  effect  of  low  land  values  in  areas  occupied  by  these  races, 
considered  objectionable,  cannot  be  attributed  to  the  race  or  national- 
ity alone,  however,  for  these  groups  have  frequently  moved  into  old 
areas  that  were  in  a  state  of  deterioration  already.  There  can  be  little 
doubt,  however,  that  the  presence  of  the  colored  population  in  the  areas 
east  of  State  Street  is  the  specific  cause  of  lower  land  values  there,  for 
in  the  district  east  of  Cottage  Grove  Avenue  from  Thirty-ninth  to 
Fifty-first  Street,  which  is  occupied  by  white  persons,  the  land  values 
in  the  opinion  of  the  tax  assessors  for  1931  are  three  times  as  high  as  the 
land  values  in  the  colored  belt  just  west  of  Cottage  Grove  from  Thirty- 
ninth  to  Fifty-first  Street.  While  the  land  just  east  of  Cottage  Grove 
Avenue  has  better  improvements  and  is  a  little  closer  to  the  lake  and 

*  The  list  was  prepared  chiefly  by  John  Usher  Smyth,  West  Side  real  estate  broker. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         317 

would  bear  a  higher  value  on  that  account,  it  also  suffers  from  proxim- 
ity to  the  colored  section,  so  that  a  considerable  part  of  the  difference  in 
land  values  is  due  to  the  difference  in  the  race  of  the  tenants.  In  many 
cases,  however,  the  undesirable  racial  factor  is  so  merged  with  other 
unattractive  features,  such  as  proximity  to  factories,  poor  transporta- 
tion, old  and  obsolete  buildings,  poor  street  improvements,  and  the 
presence  of  criminal  or  vice  elements,  that  the  separate  effect  of  race 
cannot  be  disentangled. 

The  expansion  of  these  racial  and  national  groups  has  perhaps  had 
a  greater  effect  in  promoting  a  rise  in  the  values  of  land  in  the  outer 
areas  of  the  city  than  it  has  had  upon  the  older  areas,  for  it  has  forced 
or  stimulated  the  old  American  stock  to  seek  new  neighborhoods  and 
has  caused  them  to  migrate  from  their  old  homes.  Even  these  races 
themselves  have  pushed  farther  from  the  center  of  the  city,  leaving  be- 
hind an  area  to  be  occupied  by  the  least  desirable  members  of  their 
own  race.  As  new  immigration  from  Europe  has  almost  ceased,  and  as 
industrial  expansion  in  these  near-in  areas  has  come  to  an  end,  there  is 
now  very  little  demand  for  these  areas  for  any  purpose,  and  the  prob- 
lem of  the  blighted  area,  or  the  ring  of  land  between  the  central  busi- 
ness districts  and  the  outer  areas  of  new  growth,  has  become  more 
acute.  As  Figures  57  and  59  show,  land  values  in  these  old  areas  have 
increased  but  slightly  since  1890. 

In  addition  to  the  old  cheap  residential  areas  near  the  Loop,  there 
are  newly  developed  areas  occupied  by  cottages  and  bungalows  on  the 
fringes  of  the  city.  As  the  space  just  beyond  the  old  settled  areas  has 
been  occupied  by  the  new  apartment  buildings,  as  already  noted,  the 
bungalow  and  small-home  areas  have  been  forced  still  farther  out.  On 
the  South  Side  west  of  Western  Avenue  and  south  of  Eighty-seventh 
Street,  and  on  the  North  Side  west  of  Crawford  Avenue,  are  great  areas 
of  bungalows — the  modern  cottage  for  the  family  of  moderate  means. 
This  land,  developed  from  raw  acreage,  had  phenomenal  increases  in 
value  from  1918  to  1928,  despite  its  lack  of  intensive  use,  but  any  fur- 
ther advance  is  definitely  limited  by  its  small-home  use. 

c)  Industrial  areas. — As  Figure  60  shows,  the  industrial  areas  of 
Chicago  spread  northward  and  southward  along  the  branches  of  the 
Chicago  River  during  the  days  when  lake  and  river  commerce  were  of 
paramount  importance,  and  with  the  emergence  of  belt-line  railroads 
and  of  specialized  manufacturing  districts  with  switch-track  connec- 


LAND  VALUES  IN  OLD  AREAS  SETTLED   BEFORE  1873 


AREA  BOUNDARIES:  NORTH-  NORTH,  HALSTED,  CHICAGO,  ASHLAND 
WEST  -  ROOSEVELT,  HALSTED,  22,  ASHLAND 
SOUTH-  31,  HALSTED,  39,  ASHLAND 


100,000 


/87B  1890 

YEARS 

FIG.  59 


MAP  OF  CHICAGO 

-SHOWING- 

EXTENSION  OF 
AREA  OCCUPIED 

BY 

MANUFACTURING  AND 
-    INDUSTRIAL  BUILDINGS 
1833-1933 


AREAS  OF  NEW  GROWTH  BY  PERIODS 
LEGEND 

Hi  BEFORE  1857 

[HJIgij]  1857  TO  1886 

HI  1887  TO  1910 

MM  1911    TO  1933 


FIG.  60 


320  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

tions,  factories  began  to  move  away  from  the  Chicago  River  to  loca- 
tions along  switch  tracks.  A  direct  connection  with  a  railroad  siding  is 
a  great  advantage  in  the  quick  and  economical  shipment  of  goods,  and 
the  new  manufacturing  districts  offered  services  of  freight  cars  in  pick- 
ing up  less  than  carload  lots  at  factory  doors.  With  the  advent  of  the 
motor  truck  and  the  establishment  of  freight  depots  outside  the  Loop, 
it  was  no  longer  necessary  to  be  within  horse-and-wagon  hauling  dis- 
tance of  a  downtown  freight  station.  By  moving  out,  the  factory  owner 
could  obtain  cheaper  land,  on  which  he  could  afford  to  construct  one- 
story  buildings  that  would  permit  continuity  of  operation  with  its  at- 
tendant economies.  There  was  a  further  advantage  in  savings  in  taxes 
when  the  site  was  just  outside  the  city  limits,  as  in  the  case  of  the  Clear- 
ing district.  Industries  locating  in  industrial  districts  could  also  be  near 
associated  or  allied  industries  which  would  unite  with  them  to  eliminate 
objections  property  owners  adjoining  might  file  against  them,  and  they 
could  also  secure  the  advantages  of  flexible  layouts  of  ground  and  plant 
that  permitted  expansion  without  crossing  streets  or  alleys.  As  a  re- 
sult of  this  movement  away  from  the  center,  the  values  of  near-in  in- 
dustrial land  on  the  Chicago  River  have  remained  stationary  for  several 
decades,  and  there  is  now  very  little  demand  for  most  of  the  five-or 
six-story  buildings  without  switch-track  connections  on  the  near  South 
or  West  sides.  Consequently,  it  cannot  now  be  asserted  that  these 
blighted  areas  are  in  a  state  of  transition  or  are  awaiting  a  definite  ab- 
sorption by  industry. 

d)  Outlying  business  centers. — The  section  lines  established  by  the 
surveyors  laid  down  the  geometric  pattern  of  the  business  subcenters 
of  Chicago.  These  straight  lines,  a  mile  apart,  became  "through" 
streets,  as  did  also  some  of  the  natural  trails  or  radial  highways.33  Such 
roads  were  the  first  to  be  improved  with  planks  or  macadam  and  be- 
came successively  the  routes  of  omnibus,  horse-car,  cable,  and  electric 
lines.  Taverns,  blacksmith  shops,  grocery  stores,  and  other  shops  tend- 
ed to  locate  along  these  streets  because  they  provided  access  to  the 
greatest  number  of  people.  By  1873  Madison  Street,  west  of  the  river 
to  Racine;  Clark  Street,  north  of  the  river  to  Lincoln  Park;  State  Street 
and  Cottage  Grove  at  Twenty-second  Street — all  had  become  leading 
local  business  streets.  Other  streets  passing  through  poorer  neighbor- 

M  For  the  impression  which  the  rigid  checkerboard  pattern  of  Chicago  made  upon  a 
French  observer,  see  Halbwachs,  op.  cit.,  p.  44. 


MAP  OF  CHICAGO 

-SHowiNG- 
INDUSTRIAL  LAND  VALUES-I93I 


VALUES  PER  SQUARE  FOOT 

HH  $1.00  AND  OVER 
EggS      .50  TO    .99 
{g§§§§fl      .12*2  TO  .49 
flUH      .12  AND  UNDER 


BASED  ON  1931  ASSESSMENT  OF 
LAND  IN  COOK  COUNTY  BY  I.  L.  JACOBS 


FIG.  61 


322  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

hoods,  such  as  Halsted  Street,  Blue  Island  Avenue,  Milwaukee  Avenue, 
North  Wells  Street,  and  Archer  Avenue,  were  second-grade  business 
streets,  or  the  "rialtos  of  the  slums." 

The  intersection  of  main  horse-car  routes  had  produced,  even  by 
1873,  peak  values  at  certain  points  beyond  the  central  business  district, 
notably  at  Madison  and  Halsted  streets — values  only  a  little  below 
that  of  State  and  Madison  streets.34  The  tendency  of  the  section-line 
streets  to  develop  into  commercial  thoroughfares  had  been  noted  early, 
and  the  following  statement  of  the  real  estate  editor  of  the  Chicago 
Tribune  made  in  1884  summarizes  the  development  as  one  that  had 
long  been  recognized. 

The  section  and  division  streets  have  a  greater  significance  than  the  surveyors 
ever  dreamed  of.  Being  in  all  cases  through  and  unbroken  thoroughfares,  they 
have  become,  with  few  exceptions,  business  centers  of  the  localities  through  which 
they  pass.  Thus  the  streets  running  east  and  west,  Madison,  i2th,  i6th,  22nd, 
35th  and  3Qth  streets  on  the  south,  and  Chicago,  Division,  North,  Centre,  and 
Fullerton  on  the  north,  contain  stores  and  markets  supplying  local  neighborhoods. 
North  and  south  the  same  is  true  of  Halsted,  Center  (Racine)  and  Western. 
Oblique  cross  streets  such  as  Lincoln,  Clybourn,  Milwaukee,  Blue  Island,  Archer, 
and  Cottage  Grove  also  have  become  business  streets.35 

The  growth  of  stores  along  full  section-line  streets  and  at  transfer 
points  of  horse-car  and  cable  lines  continued  during  the  eighties,  and 
by  1893  corners  with  a  land  value  ranging  from  $1,000  to  $1,500  a 
front  foot  had  developed  at  Thirty-ninth  Street  and  Cottage  Grove 
Avenue,  and  at  Thirty-first  Street  and  Indiana  Avenue.  The  antici- 
pated business  development  of  Forty-third,  Forty-seventh,  and  Sixty- 
third  streets  on  the  South  Side  was  also  being  considered  at  that  time. 
When  Charles  Yerkes  constructed  street-car  tracks  in  the  section-line 
streets  of  the  Northwest  Side  in  the  nineties,  the  prospective  utilization 
of  these  thoroughfares  as  business  streets  was  reflected  in  a  sharp  ad- 
vance in  their  selling  prices  long  before  there  was  any  actual  develop- 
ment.36 

The  building  of  the  elevated  lines  gave  a  setback  to  the  continued 
growth  of  business  subcenters — as  the  new  lines  carried  people  to  the 

34  In  1873  the  value  of  the  corners  of  Madison  and  Halsted  streets  was  $1,500  per  front 
foot  and  that  of  the  corners  of  State  and  Madison  streets  $2,500  a  front  foot. 

35  Chicago  Tribune,  August  23,  1884. 

36  Statement  of  Alonzo  H.  Hill,  a  director  in  some  of  the  Yerkes  traction  lines,  made  to 
the  writer  in  September,  1933. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


323 


rising  Loop  department  stores.  In  1910,  as  Figures  62,  63,  64,  and  65 
show,  land  values  sloped  sharply  downward  away  from  the  central 
business  district  along  Madison,  State,  Clark,  and  Michigan  streets. 

LAND  VALUES  ON  STATE  STREET -CHIC AGO  AVENUE  TO  55  STREET 
1873,  1910,  1928 


Uj  Uj  Ui 

£      ^      s 


<t            Q: 

fc         k 

STREET 

STREET 

STREET 

FIG.  62 


The  number  of  outlying  business  corners  in  1910,  as  Figure  39  shows,37 
was  relatively  small  in  the  light  of  later  development.  Then  from  1910 
to  1915,  and  from  1921  to  1928,  came  those  remarkable  spurts  of  out- 

37  See  above,  p.  253. 


324 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


lying  business  centers  until,  as  Figure  40  shows,38  the  number  of  valu- 
able corners  outside  the  Loop  had  by  1928  greatly  increased. 

In  the  boom  following  the  World  War,  enough  land — 5,000,000 
front  feet — was  zoned  for  business  in  Chicago  to  support  a  population 

LAND  VALUES  ON  MADISON  STREET-STATE  STREET  TO  CENTRAL  AVENUE 
1873, 1910,  1928 


FIG.  63 

of  10,000,000  while  miles  of  business  frontage  were  laid  out  on  all  the 
highways  leading  into  Chicago.  The  value  of  the  business  land  in  Chi- 
cago exceeded  in  1928  that  of  all  other  land. 

38  See  above,  p.  254. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


325 


Figures  67,  68,  and  69  show  the  pattern  of  these  business  land  values 
on  major  outlying  streets.  Since  nearly  every  street  falling  on  a  full- 
section  or  half-section  line  was  zoned  for  business,  the  lines  along  which 
business  development  might  take  place  were  known  in  advance,  and  the 

LAND  VALUES  ON  MICHIGAN  AVENUE -CHICAGO  AVENUE  TO  55  STREET 
1873,  1910,  1928 


FIG. 


optimistic  hopes  of  speculators  made  it  appear  that  every  street  zoned 
for  business  would  actually  be  so  occupied.  It  will  be  noted  how  regu- 
larly land  values  reach  peaks  at  section-line  intersections  or  transfer 
points.  Such  peak  values  were  partly  sustained  by  the  competition  of 


326 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


drug  stores,  banks,  and  chain  stores  for  locations.  In  many  cases,  how- 
ever, the  values  were  based  on  hypothetical  projections  of  the  rate  of 
growth  of  the  business  area  based  on  the  records  of  the  few  years  be- 

LAND  VALUES  ON  NORTH  CLARK  STREET-ROOSEVELT  ROAD  TO  LAWRENCE  AVENUE 
1873,1910,1928 


FIG.  65 

fore.  Any  land  near  a  double-section  corner  sold  for  a  high  price,  re- 
gardless of  the  actual  business  done  or  the  volume  of  traffic  passing  the 
point. 

(i)  Store  rents  and  traffic  counts. — In  the  depression  of  1932,  it  was 
found,  however,  that  in  certain  locations  there  was  a  great  difference 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


327 


between  the  flow  of  pedestrian  traffic  and  of  potential  purchasing  power 
between  the  two  sides  of  a  street  at  a  transfer  corner  and  also  that  there 
was  a  sharp  drop  in  the  flow  of  traffic  in  a  short  distance.  The  grada- 
tion of  actual  rents  paid  was  found  to  correspond  very  closely  with  this 
flow  of  traffic  as  Figure  66  shows,  which  is  sometimes  subject  to  sudden 

THE  RELATIONSHIP  BETWEEN  STORE  RENTS  AND  PEDESTRIAN  TRAFFIC  COUNTS 

STORE  RENTS-  MONTHLY  RENTS  OF  INSIDE  STO RES, 25 XBfr FEET, STEAM  HEATED-JUNE  1932 


WEST  SIDE  OF  COMMERCIAL  STREET 
89  TO  93  STREETS 


EAST  SIDE  OF  MICHIGAN  AVENUE 
110  TO  114  STREETS 


I 
i 

i 
1 

j 

i 
: 

L 

k 

..... 

TRAFFIC  C 
>  5 



i 

j 



T: 

120 

6,000 

1  r 

^ 

EN7S 

-1 

90 

2 

TRAFFIC 

COUNTS- 

4 

I) 

1 

0 

\ 

»     *• 

§ 

K 

i 

V 

! 
i 

K 

!     I 

>         * 

:       J 

' 

•—  ^ 

1 

;    f 

S—REN 

rs 

16,000 

\ 

h 

i  f 

fc. 

•—  v 

3 

i 

1 

£ 

.1    ( 

^TffAfi 

7C  COW 

-  i 

! 

i.  

2,000 
O 

O 

FIG.  66 


and  capricious  changes,  so  that  land  values  may  depend  in  the  future 
more  closely  upon  a  study  of  the  actual  potential  purchasing  power  rep- 
resented by  the  people  passing  a  store  and  less  upon  a  graduated  chart 
rising  and  falling  at  regular  intervals. 

e)  The  central  business  district  of  Chicago. — Although  the  population 
of  Chicago  moved  farther  away  from  the  central  business  district,  and 
the  area  immediately  contiguous  to  it  began  to  decay,  the  Chicago 


328 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


downtown  district  maintained  steadily  rising  land  values.  The  Chicago 
transportation  systems  were  so  routed  as  to  pour  the  residents  of  the 
three  sections  of  the  city  successively  by  omnibuses,  steam  railroads, 

LAND  VALUES -COTTAGE  GROVE,  HALSTED,  CICERO  AVENUES 
1928 


TREET 

TREET 

TREET 

\ 

TREET 

I 

TREET 

£    i 

5         J 

5      S3 

?      ? 

TREET 

TREET 

'TREET 

FIG.  67 

horse  cars,  cable  cars,  elevated  lines,  electric  surface  lines,  electrified 
railroads,  and  automobiles  into  the  central  business  district.  No  outer 
belt  of  passenger  transport  lines  encircled  the  city.  Until  the  last  few 
decades  at  least,  it  was  necessary  to  pass  through  the  downtown  area  to 
go  from  one  part  of  the  city  to  another.  Even  today  that  is  usually  the 
most  convenient  way. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         329 

Tables  XXXVIII,  XXXIX,  and  XL  show  how  the  Chicago  Loop 
buildings  under  the  pressure  of  expanding  business  confined  to  a 
limited  area  have  tapped  successively  higher  layers  of  air.  By  1893 

LAND  VALUES  ON  MILWAUKEE  AVENUE 
1910  AND  1928 


EAST-WEST  STREETS  INTERSECTING  MILWAUKEE  AVENUE 


NORTH -SOUTH  STREETS  INTERSECTING  MILWAUKEE  AVENUE 


FIG.  68 


over  10  per  cent  of  the  air  layer  from  seven  to  twelve  stories  had  been 
filled  with  buildings,  and  the  highest  towers  extended  to  sixteen  stories. 
By  1923,  when  the  new  zoning  law  permitted  tower  buildings  that  con- 


330 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


tained  as  many  as  forty-four  stories,  37  per  cent  of  the  area  from  seven 
to  twelve  stories  had  been  occupied,  17  per  cent  of  that  between  twelve 
and  sixteen  stories,  and  over  6  per  cent  of  that  between  sixteen  and 

LAND  VALUES  ON  63  AND  79  STREETS-STONY  ISLAND  TO  CRAWFORD  AVENUES 

1928 


FIG.  69 

twenty-two  stories.  From  1923  to  1930  a  new  crop  of  a  score  of  tower 
buildings  arose  in  Chicago,  which  created  a  new  skyline  and  tapped  the 
layer  of  air  that  contained  as  much  cubic  air  space  as  all  of  that  which 
buildings  had  previously  penetrated.  Yet,  as  Figure  70  shows,  these 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES          331 


TABLE  XXXVIII 

PERCENTAGE  OF  CUBIC  FEET  AT  GIVEN  HEIGHTS  TO  TOTAL  CUBIC 
FEET  IN  AREA  (CENTRAL  BUSINESS  DISTRICT) 


Building  Height  in  Stories 

1836 

1856 

1873 

1893 

1923 

1933 

Ground—  6 

IOO   O 

IOO   O 

OO    7 

SA  3 

60    2 

7—12 

o  o 

o  o 

O    3 

12    ^ 

26    7 

28  I 

13—  16 

O   O 

o  o 

o  o 

30 

8  3 

T-2      7 

17-22  
23—44.  • 

o.o 
o  o 

0.0 

o  o 

o.o 
o  o 

O.  2 

o  o 

4-8 
o  o 

9.8 

2    2 

Total 

IOO   O 

IOO   O 

IOO   O 

IOO   O 

IOO   O 

IOO   O 

TABLE  XXXIX 

PERCENTAGE  OF  AIR  SPACE  AT  DIFFERENT  HEIGHTS  OCCUPIED 
BY  BUILDINGS  (CENTRAL  BUSINESS  DISTRICT) 


Building  Height  in  Stories 

1836 

1856 

1873 

1893 

1923 

1933 

Ground—  6  

O    2 

30  o 

40  o 

61  o 

8?  o 

82  4 

7—12  .  . 

O.O 

o.o 

I    O 

IO    3 

37   2 

TO    I 

1  3—  1  6 

O   O 

o  o 

o  o 

3-2 

17    O 

36    7 

17—22 

o  o 

o  o 

o  o 

O    2 

6  3 

17   4 

23—44 

o  o 

o  o 

o  o 

o  o 

o  o 

I   07 

TABLE  XL 

CUBIC  FEET  OF  SPACE  ABOVE  THE  BLOCKS  IN  THE  CENTRAL 
BUSINESS  DISTRICT  OF  CHICAGO 


BUILDING  HEIGHT 
IN  STORIES 

TOTAL  Cu.  FT. 
AIR  SPACE 

No.  or  Cu.  FT.  OCCUPIED  BY  BUILDINGS 

1873 

1893 

1923 

1933 

Basement  area 

101,200,000 
343,000,000 
209  ,  ooo  ,  ooo 
102,000,000 

72,500,000 

16,200,000 

First  6  stories  (0-72 

ft.).  ..v...  
7-12   stories  (73-144 
ft.)  

416,520,000 
416,520,000 
277,680,000 
416,520,000 
1,522,220,000 

150,000,000 
500,000 

290,000,000 
43,000,000 
10,000,000 
800,000 

350,000,000 
155,000,000 
48,250,000 
27,500,000 

13-16  stories  (145-92 
ft) 

'        ......... 
17-22    stories    (193- 
264  ft.)  
23-44    stories    (265- 
^28  it} 



Total  above  base- 
ments   

3,042,440,000 

150,500,000 

343,800,000 

580,750,000 

742,700,000 

— 

1                                     III 

• 

I 

J                                                       p.             p        p 

J                                                                                                     UJ                         u               ij 

i              1    !  I 

(72  FEET) 

_ 
u 

C 

? 

S3  idois  jo  aig  MOM  NI 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         333 

new  towers  filled  only  i  per  cent  of  the  air  layer  into  which  they  jutted, 
and  the  space  in  these  towers  represented  only  2  per  cent  of  all  the 
space  in  the  buildings  in  the  central  business  district.39 

This  vertical  expansion  of  the  Loop  was  made  possible  and  necessary 
by  the  completion  of  elevated  lines  on  the  South,  West,  and  North 
sides,  which  were  routed  to  pour  their  traffic  into  the  limited  iron-bound 
circuit  known  as  the  "Loop."  A  different  system  of  transportation, 
such  as  that  of  the  subways,  might  have  spread  this  development  out  in 
a  longer  line,  or  a  different  routing  of  the  elevated  system  might  have 
developed  a  concentration  point  elsewhere;  but  the  Loop  land- value 
pattern  as  it  developed  was  the  inevitable  result  of  the  laying-down  of 
a  transportation  system  which  intensified  the  natural  advantages  of  the 
Loop  area. 

The  rapid  development  of  the  north  shore  and  the  Gold  Coast  after 
1900,  the  great  increase  in  the  number  of  automobiles  after  1910,  and 
the  opening  of  the  Michigan  Avenue  link  bridge  did,  however,  combine 
to  break  the  iron  bands  of  the  Loop  after  1920.  The  new  double-decked 
Michigan  Avenue  opened  a  channel  across  the  river  for  the  flow  of 
automobile  traffic  to  the  Gold  Coast  and  the  north  shore.  The  fashion- 
able carriage  trade  that  had  developed  South  Michigan  Avenue  now 
spread  northward. 

39  This  computation  and  those  following  showing  the  air  space  occupied  by  buildings  in 
the  Loop  at  different  periods  were  made  in  the  following  manner:  The  calculations  were 
first  made  for  the  year  1933.  The  height  of  every  building  in  the  central  business  district 
of  Chicago  in  the  area  north  of  the  middle  of  Van  Buren  Street  to  the  river  on  the  north  and 
west  and  to  Grant  Park  and  Beaubien  Court  on  the  east  was  determined  by  actual  inspec- 
tion. The  number  of  cubic  feet  in  every  building  in  this  area  was  obtained  from  the 
measurement  made  by  the  assessor  for  taxation  purposes  in  1931.  The  cubic  feet  in  base- 
ments given  in  these  same  measurements  were  subtracted  from  the  totals,  which  included 
the  basement  areas.  For  each  building  the  total  cubical  content  above  the  ground  was 
divided  by  the  number  of  stories  to  obtain  the  average  cubic  content  of  each  floor.  The 
total  space  in  towers  in  each  building  is  separately  given  by  the  assessor's  measurements. 
Allowances  were  also  made  for  setbacks  in  buildings  or  unusual  variations  between  the 
cubic  content  of  different  floors  in  each  building.  The  averages  for  each  floor  thus  de- 
termined were  multiplied  by  the  number  of  floors  in  each  building  falling  within  the  height 
limits  shown  in  the  chart.  It  is  important  to  note  that  the  chart  shows  only  the  cubic  con- 
tent of  each  class  taken  as  a  total.  Thus  the  content  of  the  air  space  occupied  by  the  first 
six  stories  contains  one-,  two-,  three-,  four-,  and  five-story  buildings.  The  vacant  air  space 
up  to  the  six-story  level  includes  not  merely  vacant  ground,  but  the  air  space  above  build- 
ings lower  than  six  stories. 

Having  thus  determined  the  air  space  occupied  by  Loop  buildings  in  1933,  the  age  of 
all  buildings  standing  in  the  Loop  was  ascertained  from  the  records  of  the  county  assessor's 


334  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

In  the  last  boom  from  1923  to  1929,  the  central  business  district  ex- 
panded laterally  as  well  as  vertically.  Skyscrapers  were  erected  out- 
side the  circuit  of  the  elevated  lines  on  North  Michigan  Avenue,  on  the 
new  Wacker  Drive  along  the  south  bank  of  the  river,  on  South  Michi- 
gan Avenue  south  of  Van  Buren  Street,  and  on  Madison  Street  at  the 
south  branch  of  the  river.  On  the  North  Side  at  the  forks  of  the  river 
was  completed  in  1930  the  huge  Merchandise  Mart.  Thus  the  amount 
of  cubic  air  space  in  which  it  was  sought  to  project  buildings  was  in- 
creased by  doubling  the  ground  area  laterally  and  by  doubling  the  air 
layers  vertically.  Such  expansion,  made  possible  by  the  reckless  bond 
financing  of  the  neo-gilded  age,  could  not  be  maintained.  Already  there 
has  been  a  tendency  to  contract  from  the  outposts  of  the  Stevens  Hotel 
and  the  Civic  Opera  Building,  which  are  too  far  from  the  main  center  of 
business  to  be  profitable  at  the  present  time. 

The  area  occupied  for  retail  uses  in  Chicago  expanded  following  the 
completion  of  the  elevated  Loop,  so  that  the  wholesale  trades  were 
pushed  out  of  Wabash  and  Michigan  avenues  by  1910.  The  removal  of 
the  South  Water  Street  market  in  1922  and  the  completion  of  the 
Wacker  Drive  likewise  expelled  the  wholesale  trades  from  the  north 
end  of  the  central  business  district.  The  wholesale  district  is  now  chief- 
ly confined  to  the  area  west  of  Wells  Street  to  the  river,  from  Madison  to 
Harrison  Street,  and  this  area  has  suffered  since  1930  from  the  competi- 
tion of  the  Merchandise  Mart  on  the  north  bank  of  the  river.  The  fi- 
nancial center  along  LaSalle  Street  has  expanded  vertically  rather  than 


office.  The  height  distribution  of  the  cubic  content  of  existing  buildings  that  were  also 
standing  at  the  periods  shown  in  the  chart  was  then  computed.  To  this  were  added  compu- 
tations for  buildings  torn  down,  estimates  of  the  cubic  content  for  which  were  obtained 
from  the  records  of  the  Economist.  This  carried  the  record  back  to  1872. 

Estimates  for  the  periods  prior  to  the  fire  of  October  9,  1871,  which  destroyed  all  build- 
ings in  the  present  Loop,  were  made  from  computations  from  photographs  of  the  city  show- 
ing the  character  of  buildings  in  the  area. 

The  accuracy  of  the  foregoing  chart  and  tables  is  therefore  greatest  for  the  recent 
periods;  the  margin  of  error  is  greatest  for  the  early  periods.  Some  of  these  early  figures, 
however,  are  highly  accurate,  as  it  was  known,  for  instance,  that  in  1836  and  in  1856  there 
were  no  buildings  in  Chicago  over  six  stories  in  height,  and  that  in  1873  there  were  very- 
few  such  buildings. 

In  these  calculations,  spires  of  churches,  monuments,  and  flagpoles  on  the  tops  of  tall 
buildings  have  been  ignored,  as  the  purpose  has  been  not  to  show  maximum  heights  estab- 
lished by  such  objects,  but  to  indicate  the  rentable  building  space  at  different  height  levels. 
The  total  number  of  cubic  feet  of  air  space  over  the  Loop  does  not  include  that  over  streets 
and  alleys. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


335 


laterally,  a  succession  of  new  buildings  on  the  same  sites  providing  the 
needed  growth.  These  buildings  fronting  on  LaSalle  Street  or  Jackson 
Street  near  LaSalle  have,  however,  been  extended  to  cover  entire 
blocks  and  thereby  carried  over  the  influence  of  the  main  financial 
street  to  the  adjoining  streets. 

The  continual  growth  of  the  central  business  district  of  Chicago  for  a 
century  has  required  successive  crops  of  buildings  on  the  same  site  to 
meet  the  demands  of  different  or  more  intensive  uses.  Since  1830  at 
least  six  different  structures  have  occupied  the  southeast  corner  of 
Washington  and  LaSalle  streets,  each  of  which  in  turn  was  expected  to 

TABLE  XLI 

CUBIC  CONTENTS  OF  BUILDINGS  IN  CHICAGO  CENTRAL  BUSINESS 
DISTRICT  BY  AGE  GROUPS  (INCLUDING  BASEMENT  AREA) 


Classification 
According  to 
Date  of  Erection 

No. 
Buildings 

Percentage 
Total 
Number 

Cubic  Content 

Percentage 
Total 
(Cubic  Con  tent) 

Percentage 
Average  Depre- 
ciation in  1928 

1871-87  
1888-1900.  .  . 
1901-20  
IQ2I-33  

Total  .  .  . 

230 

168 
125 
84 

37-  91 

27.69 
20.60 
13.80 

97,109,713 
160,657,824 

353,544,243 
234,458,055 

11.47 
19.01 
41.80 
27.72 

63.0 

47-5 
23.0 
9.0 

607 

IOO.O 

845,759,835 

IOO.OO 

22.  0 

endure  for  many  years.  There  are  probably  few  spots  in  the  downtown 
district  which  have  not  been  occupied  by  at  least  three,  if  not  four,  sets 
of  buildings.  Along  LaSalle  Street,  where  the  replacement  has  occurred 
more  frequently  than  on  any  other  street,  thirteen-story  skyscrapers 
with  a  structural  life  of  a  century  or  more  have  been  torn  down  to  give 
room  for  twenty- two-  or  forty-four-story  tower  buildings.  The  age  of 
the  buildings  in  the  Loop  as  given  in  Table  XLI  shows,  however,  that 
a  great  many  of  the  buildings  erected  just  after  the  fire  of  1871  still 
survive.  Yet,  in  cubic  content,  these  buildings  are  of  far  less  importance 
than  the  ground  area  covered  by  them  would  indicate.  Most  of  the 
sites  occupied  by  them  are  awaiting  conversion  to  a  higher  and  better 
use.  Table  XLI  shows  the  number  of  cubic  feet  by  age  groups,  includ- 
ing basement  space,  of  the  buildings  standing  in  1933  in  the  area  bound- 
ed by  the  lake,  the  river,  and  the  center  line  of  Van  Buren  Street.40 
Thus,  as  Table  XLI  shows,  approximately  70  per  cent  of  the  cubic 

4°  From  the  property  record  cards  of  the  county  assessor  of  Cook  County,  Illinois. 


336  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

space  in  the  present  Loop  has  been  built  since  1900.  The  heart  wood  of 
the  organic  Chicago  is  constantly  replacing  old  tissues  with  new  ones, 
in  marked  contrast  with  the  static  condition  of  the  belt  of  dead  wood 
around  the  Loop  known  as  the  "blighted  area"  which  has  ceased  to 
grow. 

Tall  buildings  do  not  necessarily  develop  high  land  values,  for  the  re- 
turns may  not  pay  for  the  added  building  costs.  Some  of  the  highest 
land  values  on  State  Street,  as,  for  instance,  the  Woolworth  Store 
south  of  Washington  Street,  are  derived  from  business  mainly  con- 
ducted on  the  first  floor  and  in  the  basement. 

It  is  difficult  to  classify  the  uses  of  the  central  business  district  by 
cubic  space  because  there  is  some  overlapping.  Table  XLII  indicates, 
however,  the  major  classifications. 

TABLE  XLII 

PRINCIPAL  TYPES  OF  USES  OF  CENTRAL  BUSINESS 
DISTRICT  OF  CHICAGO 

Type  of  Building  Cubic  Ft.  Occupied 

Department  stores 105 ,000,000 

Hotels 65,000,000 

Theaters 15,000,000 

Office  buildings 350,000,000 

Of  these  uses,  department  stores  have  been  static  for  a  decade,  as 
have  also  legitimate  theaters.  The  numerous  bank  consolidations  have 
left  a  dozen  vacant  bank  floors  in  the  Loop,  which  it  is  difficult  to  con- 
vert to  any  other  use.  There  was,  before  the  opening  of  the  World's 
Fair,  at  least  a  temporary  surplus  of  hotel  space. 

The  fact  that  the  central  business  district  of  Chicago  has  not  moved 
out  of  the  square  mile  of  land  surrounding  State  and  Madison  streets  in  a 
century  and  after  1882  almost  ceased  to  spread  has  caused  the  intense 
utilization  and  the  tremendous  increase  of  land  values  in  that  area.  As 
Table  XLIII  shows,  the  value  of  the  land  in  a  district  that  represented 
only  one- tenth  of  i  per  cent  of  the  land  area  within  the  1933  corporate 
limits  of  Chicago  has  varied  from  one-eighth  to  two-fifths  of  the  value 
of  a  territory  approximately  one  thousand  times  as  large.  The  relative 
importance  of  the  land  value  in  this  concentrated  area  as  compared  with 
the  rest  of  the  land  in  the  city,  however,  has  risen  and  fallen.  The  early 
importance  of  this  district  in  1836,  when  it  contained  most  of  the  set- 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


337 


tied  area  of  Chicago,  and  in  1856,  when  it  had  within  its  boundaries  a 
retail  and  wholesale  area  that  had  risen  rapidly  in  value,  had  declined 
with  reference  to  the  rest  of  the  city  by  1873  as  a  result  of  a  suburban 
movement  stimulated  by  horse-car  lines,  steam  railroads,  and  the  parks. 
At  that  time  fashionable  residential  land  on  Prairie  Avenue  was  worth 
nearly  half  as  much  as  land  on  the  best  retail  shopping  streets  in  the 
downtown  area.  The  coming  of  the  elevated  lines,  skyscrapers,  and  the 
State  Street  department  stores  caused  a  strong  centralizing  movement, 
and  from  1873  to  1910  land  values  in  the  central  business  district  rose 

TABLE  XLIII 

LAND  VALUES  IN  CENTRAL  BUSINESS  DISTRICT  AND 
ENTIRE  AREA  OF  CHICAGO  COMPARED,  1836-1926 

(Millions  of  Dollars) 


Year 

Loop  Land  Value 

Percentage  of 
Value  of  Land 
for  the  Entire 
City 

1836 

$           2 

20  o 

1856.  . 

?c 

28  o 

1873.  . 

72 

12    < 

1802.  . 

ISO 

23    3 

IQIO 

600 

AQ     Q 

y     
IO26 

I    OOO 

2O     O 

from  12.5  to  40  per  cent  of  the  aggregate  values  for  the  entire  city. 
After  1921  the  centrifugal  forces  again  gained  the  ascendancy  with  the 
rise  of  the  outlying  neighborhood  centers  and  the  shift  of  population 
outward,  and  the  proportion  of  Loop  land  values  to  aggregate  land 
values  for  the  city  dropped  from  40  to  20  per  cent  when  Loop  values 
rose  only  67  per  cent  from  1910  to  1928  compared  with  a  rise  of  233 
per  cent  for  the  city  as  a  whole. 

In  view  of  the  high  percentage  of  the  entire  land  value  of  the  city 
that  is  represented  by  the  value  of  this  limited  area,  and  in  view  of  the 
great  differences  in  values  between  different  parts  of  this  Loop,  it  has 
been  considered  desirable  to  show  the  land  values  of  this  section  block 
by  block  for  important  peak  and  valley  years.  Accordingly,  in  Figures 
71,  72,  73,  74,  and  75  value  data  that  will  tend  to  establish  the  contours 
and  elevations  of  these  Himalaya  Mountain  peaks  of  Chicago  land 
values  for  a  century  are  given. 


MAPS  OF  PART  OF  THE  CENTRAL  BUSINESS  DISTRICT  OF  CHICAGO 

-SHOWING- 

VALUATIONS  OF  INDIVIDUAL  LOTS  FORTHE PERIODS 
1830,1836,1854-1856  AND  I870H873 


1830 

BASED  ON  SALES  FROM  1830-1832 
SOURCE:  A.T.  AN  ORE  AS.'HI  STORY  OF  CHICAGO". 


1836 

BASED  ON  SALES  ON  JUNE  20,  1636 
SOURCE'  REPORTED  IN  THE  CHICAGO  AMERICAN- JULY  23.  I83S 


1870-1873 

BASED  ON  SALES 
SOURCE: EVERETT  CHAMBERLIN -CHICAGO  AND  ITS  SUBURBS.  1874 


FIG. 


MAPS  OF  PART  OF  THE  CENTRAL  BUSINESS  DISTRICT  OF  CHICAGO 

-SHOWING- 

VALUATIONS  OF  INDIVIDUAL  LOTS  FOR  THE  PERIODS 
1896,1909-1913,1925-1928  AND  1931 


1896 

BASED  ON  APPRAISALS  BY  THE  SWIFT  TAX  COMMISSION-I8D6 
SOURCE:  ECONOMIST-MAY  16,1896 


1909-1913 

BASED  ON  SALES  AND  LEASES 
SOURCE:  ECONOMIST -MARCH  28.1914 


IPS 

1925-1928 

BASED  ON  SALES  AND  LEASES 
SOURCE:  ECONOMIST-  APRIL  21,1928 


FIG.  72 


MAPS  OF  THE  CENTRAL  BUSINESS  DISTRICT  OF  CHICAGO 

-SHOWING  - 

LAND  VALUES  FOR  THE  YEARS  1830,1836,1856, 1873 

IN  DOLLARS  FOR  AN  AVERAGE  FRONT  FOOT  IN  EACH  BLOCK  INCLUDING 
INSIDE  AND  CORNER  LOTS  WITH  A  DEPTH  OF  HALF  A  BLOCK 

1836 


1830 
JU 


130          130          200 


TjBBBOBB^g* 


joi    isQsQsi  ||  |s|  n  is 


TpDiDBBBiBDOf   tDOB'BBBOOr 


1856 


-rt^vS  rS  n  n  n  n  n  n  n  i     i  i     i  r 
1873 


iv-~ -••••-•— 

\    //2j-Dn"[iz]^[izii8nn°czii]snn°nLii 

~1 '         IOOO        IOOO         IOOO        1250        1250         IOOO        IOOO  75O 

I>BsBB«BBBBB 

"•*-— ^    500     550     600     700     700     700     700     7OO 

lAHiHORiFMITtm 


400         SCO         500         7SO 


750          IOOO          BOO          IOOO          »00 


SO  250         300 


750  BOO          IOOO        2100         IZOO         1500         l«00          IOOO 

GOBOBBffiDQi 

TOO        2000        1600         2000        2000         1200 

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iOOO 


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i  V*  ^ 


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I  i  1 

FIG.  73 


n  n  n  n  n  i — i  i — i  r 


i  !  M  s  1 


MAPS  OF  THE  CENTRAL  BUSINESS  DISTRICT  OF  CHICAGO 

-SHOWING - 

LAND  VALUES  FOR  THE  YEARS  1894,1910,1928,1931 


1894 


1910 


2600     3i25      3310      2470     2»oo      2soo 


J23S        3440        3800        3280         2560 


J,JL—L 


2650        3300       4250        4000        3400 


3070        3235        4330        5750        5750         4425 


-        **,-          ~~        ^.»         —  -        ----         ---        .....  -- 

BiBOBlBBiBOBO 

~l  -  M        2SOO         8*50         «I50         6200        6S5O        8550        5900          250O  ,  5OOO         «OOO         SOOO       11500       12500      11800       II50O          75OO 


QBBOBQDDCD 


3000        4300 


750     3750         5400 


13200      12500        SOOO 


I005O       I4OOO      IIOOO         5400 


IOOOO      IOOOO       IIOOO         BOOO         SOOO 


OOBOBBO 

SO  2600    5000    7000    »7OO   »OOO    96OO    900O 

]S| 1*1 i"i     i*[  in°l Hi     i«l     l« 

500  3730         4400   85OO  »8OO  I20OO     IIOOO       10440       6500 

goOSBCSWOne 


GOBI 
IJBOBBBIBiDDIDDi 

6500       12000       ISOOO      I6OOO       19000      2OOOO       ISOOO 

BOBIBiBIDlDi 

5000         8000       IIOOO        13000     ISOOO       17000      16000      ISOOO 

OBiBIBIBODir 

6000       IIOOO        13000       14000      I700O      17000       ISOOO 
600012000200002000014000       16000       17000       14000 

1ODIQOO  i  DIDOC 

50       4600          8000       6000      7000        7000        60OO         IOOOO 


rn  n  n  n  n  n 


1928 


n  n  n  n  n  n 
1931 


IOOOO       IOOOO     IOOOO      IOOOO       IOOOO      .0000       IOOOO 


3700  5000-5500  8000        85OO        7250        6000         8000 


2JiBBeiHiBBiBiffliBBi 

—I  -  H      '  '      '  '  ,,.,«..        --....-      jjooo     JOOOQ       50000  -  3800         4500  9000HOOOO  13000  «  14000       ISOOO««I7SOO        12000 


5250         8000         15000      I875 


9000        12000       20000     3SOOO      35OOO     45000      45OOO      3SOOO 

SiBiBIBIBIBiDlDi 

6000         IOOOO        ISOOO       22500      22SOO     3250O      32500       30OOO 

D°l 
*l 

8000         6000        IIOOO       16000       200OO     25000      2! 


2750030000  22SOO     270OO      27OOO       270OO 


ODIDIBIDID  IB  O 

i — i  n  n  n  n  n  n  n  i 

| 
I       !      S       ,       I       . 

i   M   I   I 


FIG.  74 


MAPS  OF  THE  CENTRAL  BUSINESS  DISTRICT  OF  CHICAGO 

-SHOWING- 

LAND  VALUES  FOR  THE  YEARS  19  10,  1921,1928,  1931 


IN  DOLLARS  PER  FRONT  FOOT  FOR  A  LOT  IN  THE  MIDDLE  OF  THE  BLOCK. 
WITH  A  DEPTH  OF  100  FEET 


1910 


192, 


2000        2000        2000        1750          1500 


eeSBBCO 

3500    5000   6000    6000    6000    5000    4000 

OOBiBiBiBOO 


2500         3000 


BDODiB  DiD 


1928 


5OQiDlBPDJ«]QDg! 

r"       2000          2000  2500         3500       4SOO        5OOO  ~  450O          4OOO 

•TT""U — i   i 1   n  n  r~i   I 

1931 


r~i  n  n  n  n 


4000         5500        5500 


475005250        5500        5000         6 

?an]oas[^8[: 


3000         3750        6000        60 

IIP* 


ST.         3000    4500    S5OO   7000    7500   eccO    8000    7000 

rDGiBOBOBIDBGQf 

450O      500O         550O        7500        II 000       I30OO      13000        SOOO        6000 

IBBiBiBlBiBiBiOO 


3250         4250         6500         7500         BOOO         9000         8000          7000 


— ,  3500         4500         0""}S0ooovuu        80O°         900°         BOOO         »OCO 

SOUyBoQfflQDQt 

i 


f     1      «      I  I 

I  i       i 


FIG.  75 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         343 

In  Figures  71  and  72  sale  prices  or  valuations  of  entire  lots  or  parcels 
in  part  of  the  central  business  district  are  shown,  and  in  Figures  73,  74, 
and  75  computed  front-foot  values  are  presented.  In  the  earlier  periods 
up  to  1873,  when  whole  lots  were  sold  and  when  the  differences  between 
corners  and  inside  lots  were  not  so  great,  the  problem  of  land  values  in  the 
central  business  district  was  relatively  simple.  Since  1890,  however,  the 
computation  of  values  in  the  Loop  has  become  far  more  complex  be- 
cause of  the  splitting  of  the  original  lots  into  smaller  holdings  or  the 
combination  of  several  lots  into  larger  plots  of  irregular  size  and  the  in- 
creasing importance  of  corner  influence  and  depth  factors.  Valuations 
by  George  C.  Olcott  and  by  the  tax  assessors  since  1910  have  been  on 
the  basis  of  a  standard  front  foot  in  the  middle  of  the  block  with  a  depth 
of  100  feet.  As  this  has  become  a  familiar  and  somewhat  customary 
standard  for  purposes  of  comparing  recent  Loop  land- value  trends, 
valuations  made  on  this  basis  by  Olcott  for  1910, 1921, 1928,  and  by  the 
tax  assessor  for  1931  are  presented  in  Figure  75. 

Since  lots  in  the  central  business  district  as  originally  platted  were 
from  1 60  to  190  feet  in  depth,  and  early  sales  were  made  on  that  basis, 
it  is  evident  that  front-foot  valuations  with  a  depth  running  to  the 
middle  of  the  block  cannot  be  compared  with  later  valuations  applying 
to  a  front  foot  with  a  depth  of  100  feet.  Since  modern  depth  rules  could 
not  be  correctly  applied  to  earlier  conditions  to  reduce  the  earlier  val- 
ues to  a  loo-foot  depth  basis,  valuations  have  been  prepared  showing 
recent  Loop  land  values  on  a  basis  of  a  front  foot  running  to  the  middle 
of  the  block,  and  also  on  the  basis  of  an  average  front  foot  for  the  entire 
block  including  corners.  The  earlier  land- value  maps  were  computed 
on  the  same  basis,  so  that  the  eight  land- value  maps  in  Figures  73  and 
74  are  strictly  comparable. 

Inasmuch  as  an  increase  of  depth  from  100  to  180  feet  adds  43.2  per 
cent  to  the  front-foot  value  and  corner  premiums  add  as  high  as  60  per 
cent  to  the  front-foot  value  according  to  the  rule  applied  by  the  tax 
assessor  in  1931,  such  a  method  of  computation  adds  considerably  to 
front-foot  values  given  on  a  loo-foot  basis.  The  values  in  Figure  74, 
which  are  based  on  sales  and  leases,  show  amounts  that  are  considerably 
higher  for  1910  and  1928  than  the  Olcott  figures,  even  after  the  addition 
to  Olcott's  value  is  made  for  depth-  and  corner-influence  factors.  This 
is  due  to  the  method  employed  by  the  writer  consistently  in  this  book 
of  registering  the  sales  value  of  properties  and  not  conservative  ap- 


344  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

praisals.  Some  extremely  high  leases  were  disregarded  in  computing 
the  front-foot  values  shown  in  Figure  74,  but  the  writer  did  not  deem 
it  proper  to  discount  Loop  leases  or  to  ignore  speculative  sales  in  the 
central  business  district,  when  they  entered  into  valuations  made  else- 
where. 

In  Figures  71  and  72  sales  data  and  tax  valuations  are  presented  for 
parcels  actually  sold  or  valued,  so  that  the  reader  may  make  his  own 
comparisons  as  to  increases  in  land  values  for  part  of  the  Loop  area  for 
the  period  of  the  century. 

In  Table  XLIV  the  land  values  per  front  foot  for  the  north-south 
streets  in  the  central  business  district  are  presented  for  both  boom  and 
depression  years  in  each  cycle  from  1830  to  1931. 

/)  Summary:  Chicago  land  values  by  types  of  uses. — Tables  XLV 
and  XLVI  summarize  the  movement  of  land  values  in  Chicago  from 
1910  to  1933  by  principal  types  of  uses.41 

D.  THE  LONG-RUN  TREND  OF  CHICAGO  LAND  VALUES 

So  far  Chicago  land  values  have  been  discussed  in  terms  of  current 
dollars  and  no  adjustments  have  been  made  for  changes  in  the  level  of 
either  prices,  wages,  or  interest  rates.  In  order  to  measure  the  gain  in 
land  values  that  would  have  occurred  had  the  price  level,  wage,  and  in- 
terest rates  been  stationary,  Fig.  77.  has  been  prepared.  Since  Chicago 
land  values  rose  after  the  first  great  declines  in  the  level  of  wholesale 
prices  in  the  Civil  War  and  World  War  periods,  and  since  the  rise  in 
prices  prior  to  1836  and  1857  was  moderate  while  that  prior  to  1890  was 
negligible,  the  correction  of  the  current  dollar  figure  of  Chicago  land 
values  for  changes  in  wholesale  prices  does  not  greatly  affect  the  rise  of 
land  values  in  boom  periods.  Because  of  the  long-run  upward  tendency 
of  prices,  particularly  since  1900,  however,  the  deflation  for  changes  in 
the  purchasing  power  of  the  dollar  does  lower  the  height  of  the  last 
peak  in  1926-28  as  compared  with  earlier  peaks. 

i.  Corrections  of  the  land-value  data  for  changes  in  wholesale  prices, 
wages,  and  interest  rates. — It  is  questionable  as  to  whether  or  not  correc- 
tion on  the  basis  of  the  wholesale  price  index,  including  the  prices  of 
many  raw  materials  and  of  farm  products,  is  the  appropriate  method  of 
deflation  for  urban  real  estate.  In  the  city,  the  cost  of  urban  goods  and 

41  Based  on  the  writer's  computations  of  the  data  in  Olcott,  op.  cit.  (1910,  1929,  and 
I933)- 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


345 


TABLE  XLIV 

LAND  VALUES  ON  NORTH-SOUTH  STREETS  IN  THE  CENTRAL  BUSINESS 

DISTRICT  OF  CHICAGO,  1830-1931 

(In  Dollars  per  Front  Foot  for  an  Average  Front  Foot,  Including 
Corners  Running  to  the  Middle  of  the  Block) 


BLOCK 

DEPTH 

1830 

1836 

1841 

1856 

1861 

1873 

1877 

1894 

1910 

1928 

1931 

E.F. 

W.F. 

Wack.-Lake  

State  Street,  5,856  Feet 

160 
160 
1  60 
160 
160 
1  60 
160 

IOO 

171 
"3 
151 
151 
143 
147 
144 
I4S 

0.60 
0.25 
0.15 

O.IO 

(0.07) 
(0.05) 

(0.02 
(o.oi 

1  60 
IOO 

67 
40 
25 

23 

20 

19 

(12) 

(12) 

o 

(?) 

(5) 

& 

(500) 
(550) 
(400) 
300 
300 
250 
ISO 
(IOO) 

(200) 
(250) 

(200) 
2OO 
2OO 
(ISO) 
(IOO) 
(IOO) 

,000 

,200 

,750 

,000 

,750 

,Soo 

,250 

,000 

500 

800 

1,200 

1,000 

1,000 

800 
600 
500 

3,900 
4,700 
10,800 
13,600 
11,000 
10,000 
9,Soo 
7,850 

6,000 
12,000 
21,000 
27,500 
31,000 
27,300 
25,000 
20,000 

20,000 
25,000 
35,000 
50,000 
SS.ooo 
50,000 
40,000 
25,000 

7,600* 
18,350* 
25,OOO* 
28,000* 
28,000* 

26  ,  ooo* 
24,500* 
i  7  ,  ooo* 

Lake-Rand  

Rand  -Wash 

Wash.-Mad  
Mad  -Mon. 

Mon.-  Adams  
Adams-Jack  
Jack.-VanB  

Wack.-S.  Water... 
Water-Lake 

Michigan  Avenue,  4,472  Feet 

112 
132 
129 
I63 
163 
I63 
l63 
I63 
163 

62 

70 
70 

(0.50) 
(0.20 
(0.12) 
(0.08) 

(0.05) 
(0.04) 
(0.02) 
(o.oi) 
(o.oi) 

(150) 

(100) 

(90) 
(80) 
(70) 
60 

45 
40 
30 

5 

2 

700 
650 

550 
(500) 
(450) 
(400) 
(350) 
(300) 
(250) 

350 

(300) 
(250) 

(200) 

(175) 
(150) 
(125) 

(100) 
(100) 

,000 
,000 
,000 
,000 
,5oo 
,200 

,200 

,000 
,000 

(400) 
(300) 
(300) 
(300) 

300 
400 
300 
250 
250 

,150 

,444 
,150 
,500 
,880 
3,700 
4,000 
4,000 
4,500 

3,500 
4,000 
4,750 
6,000 

10,000 

15,000 
16,500 
16,500 

20,000 

20,000 
18,000 
17,500 
15,000 
30,000 
30,000 
27,000 
27,000 
25,000 

10,500 

I  I  ,  000 

12,000 
12,000 

17,500 
17,500 
17,500 
17,500 
16,250 

Lake-Rand  

Rand-Wash  
Wash  -Mad 

Mad.-Mon  
Mon.-Adams  
Adams-  Jack  
Jack.-VanB  

Wack  -Lake 

Wabash  Avenue,  5,837  Feet 

171 
206 
151 
151 
170 
!74 
171 

120 

216 
220 
163 
163 
171 
170 
171 
163 

(0.50) 
(0.40) 
(o.io) 
(0.03) 
(0.02) 
(o.oi) 
(o.oi) 
(o.oi) 

(100 

(50 
(30) 

(25) 

19 

17 
17 
16 

3 
3 

(400) 
400 
(400) 
(350) 
(350) 
(300 
(250 

(200) 

(200) 
(200) 
(200) 

(175 
(i75 
(150 
(125) 
(100) 

800 

,200 
,200 

,250 

,100 
,100 

,100 

,100 

(400) 

(Soo) 

(500) 

500) 
400) 
400 
500 
(400) 

3,500 
4,500 
4,500 
7,000 
6,340 
6,200 
6,000 
6,000 

10,000 
10  ,  500 

12,000 
I3,OOO 
13,200 
13,300 
13,200 
9,500 

17,500 
14,000 
i7,5oo 
21,000 
28,000 
22,500 
22,000 
15,000 

8,ooot 
8,  soof 
13,  Soof 
iS.ooot 
iS.ooot 
I3,ooot 

I2,OOOt 
II.OOOJ 

Lake-Rand  
Rand.-  Wash  
Wash-Mad  
Mad.-Mon  
Mon.-Adams  
Adams-Jack  
Jack  .-Van  B.  .  . 

Wack  -Lake 

Dearborn  Street,  6,531  Feet  (Including  Plymouth-Federal) 

160 
160 
1  60 
160 
1  60 
1  60 
1  60 
66 

160 
1  60 
1  60 
160 
1  60 
160 
160 
70 

0.55 
0.33 
(0.20) 
(0.15) 
(o.io) 
(0.03 
(0.02 
(o.oi) 

267 
1  60 
62 
33 
25 

& 

(22) 

(50) 

(25) 

(7) 
(3) 

(2) 

(2) 
(2) 
(i) 

500 
550 
600 

550 
(300) 
(150) 

(IOO) 

(100) 

(250) 
(275) 
(300) 

(275) 
(150) 
(100) 
(  So) 
(  So) 

666 

900 

1,000 
1,300 
1,300 
1,000 
1,000 

800 

(350) 

(450) 
(Soo) 
(650) 
(650) 
(Soo) 
(Soo) 
(400) 

3,570 
4,550 
7,200 
10,650 
9,000 
8,700 
10,440 
5,075 

4,200 
8,000 
13,000 
17,000 
17,500 
17,500 

16,500 
11,000 

12,500 
16,000 
23,000 
25,000 
25,000 

22,000 
22,000 
I2,5OO 

S.ooo 
7,700 
11,700 
12,500 
14,750 
14,000 

II,  OOO 

7,000 

Lake-Rand  

Rand-Wash  
Wash.-Mad  

Mad.-Mon  
Mon.-Adams  
Adams-  Jack  
Jack.-VanB  

Wack.-Lake  
Lake-Rand  
Rand-Wash  
Wash.-Mad  
Mad.-Mon  

Clark  Street,  5,898  Feet 

160 
160 
160 
1  60 
160 
1  60 
125 
107 

160 
160 
160 
1  60 
160 
1  60 
160 
103 

0.50 
0.30 

O.2O 
O.IO 

0.05 
0.03 

O.O2 
O.OI 

180 

IOO 

75 
28 
(20) 
(18) 
d7) 
(16) 

1 

o) 

3 
II 

2) 
2) 
I) 

600 

700 
800 

1,000 

800 
600 
500 

1,000 

(300) 
(350) 
(400) 
(300) 

(200) 
(IOO) 

(100) 

(IOO) 

600 

700 

1,300 
1,700 
1,  600 
1,300 
1,300 

1,000 

(300) 
(35o) 

(650) 
(750) 
(800) 
(600) 
(600) 
(500) 

3,300 
4,930 
8,740 
9,730 
9,745 
9,570 
7,000 
5,000 

7,000 

13,500 
14,000 
18,000 
20,000 

20,000 

21,000 
13,000 

IO.OOO 
I4,OOO 
2I,OOO 
29,OOO 
3O,000 
26,OOO 
25,000 
17,500 

5,600 
7,800 
12,000 
13,800 
14,000 
13,200 
14,000 
7,000 

Mon.-Adams  
Adams—  Jack  . 

Jack.-Van  B  

*  East  side  of  street. 


t  West  side  of  street. 


346  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

TABLE  XLIV— Continued 


BLOCK 

DEPTH 

1830 

i83< 

1841 

1856 

1861 

1873 

1877 

1894 

1910 

1928 

IQ3I 

E.F. 

W.F. 

Wack.-Lake  .  .  , 

LaSalle  Street,  6,466  Feet  (Including  Sherman  Street) 

160 
1  60 
1  60 
160 
1  60 
160 
160 
87 

IOO 

160 

1  60 
160 
160 
160 
160 
177 
i°5 
87 

0.30 

O.2O 
O.IO 

0.05 

0.03) 
0.02) 
o.oi) 
(o.oi) 
(o.oi) 

160 
90 

So 
30 

(20 

(18 
d7 
(16 
(i5 

(30) 

(20) 

(5) 

(2) 
)        (2) 
)        (2) 
)        (I) 
)        (l) 
)        (I) 

500 
600 
700 
800 
(7oo) 
(Soo) 
(300) 
(200) 
(200) 

(250) 
(300) 
(35o)  i 
(400)  i 
35o)  i 
250)  i 
(150)  i 
(100) 
(100) 

Soo 
700 
,200 
,800 
,Soo 

,200 
,OOO 
500 
500 

300 
350 
400 

(500) 
(400) 
(300) 
(200) 

(ISO) 
(100) 

3,200 

3,820 

7,340 

10,000 

9,400 

7,600 
8,000 
6,000 
6,000 

3,6s< 
6,6o( 

I2,50C 
20,00< 
20,OOC 
20,00< 
2I.OOC 
I2,50C 
I2,5OC 

3  I5,OOO 
3  17,500 

>  27,000 

533,000 

>  33,  ooo 

335,000 

>  35,  ooo 
)  15,000 
)  15,000 

6,500 
7,500 
13,500 
16,000 
17,000 
17,250 
17,250 
7,000 
7,000 

Lake-Rand  
Rand.-Wash.... 
Wash.-Mad  

Mad.—  Mon  

Mon.-  Adams  

Adams-  Jack  
Jack-Van  B 

Sherman 

Wack.-Lake  
Lake—  Rand 

Wells  (Fifth  Avenue)  Street,  5722  Feet 

1830 

1836 

1841 

1856 

1861 

1873 

1877 

1894 

1910 

1928 

1931 

0.50 
(0.30) 
(0.15) 
(0.07) 
(0.05) 
(0.02) 
(o.oi) 
(o.oi) 

1  60 
86 
48 
30 
(28) 
(25) 

(22) 
(20) 

( 

20) 

to) 

(3> 
(2) 
(I) 
(l) 
l) 
I) 

250 
400 
400 
400 
250 
200 
ISO 
IOO 

150 

200 

225 
225 
I7S 
IOO 

75 
So 

500 
500 

1,000 

1,100 

800 

700 
500 
300 

(250) 

(250) 

(500) 

(SSo) 
(400) 
350 
250 
ISO 

Si 

3 
Si 

4! 

3, 
3, 

260 
600 
800 

IOO 

ooo 
500 
800 

ooo 

5 
5 
5 

7 
6 
5 

,000 

,000 

,000 
,250 

,000 

,500 

,000 

,000 

10,000 
10,000 
12,500 
12,500 

II,  OOO 

10,000 
10,000 
8,000 

3,250* 
3,750* 
4,750* 

5,000* 

4,600* 

5  ,  too* 
5,ioo* 
4,500* 

Rand.-Wash  
Wash  -Mad. 

Mad.-Mon  
Mon.-  Adams  
Adams-  Jack  
Jack.-Van  B  

Wack.-Lake 

Franklin  Street,  5721  Feet 

(0.60) 
(0.40) 
(o  .  20) 
(o.io) 
(0.05) 
(0.04) 
(0.03) 
(0.03) 

1  60 
IOO 
52 

A 

(20) 
(18) 
(16) 

(15) 

(8) 

(3) 

(2) 

(I) 
(l) 
(I) 
(l) 

125 

ISO 
200 

200 
125 
IOO 

80 

So 

SO 
75 
90 
00 
60 
So 
40 

2S 

300 
400 
400 
500 
500 
400 
300 

200 

200 
250 
300 
350 
350 
275 
2OO 
IOO 

2, 
2, 

3t 

3, 
3, 

2, 

2, 
2, 

500 

667 

222 
420 
230 

500 
625 
350 

a 
3 

3 
4 
4 
4 
4 
3 

,250 

,000 

,250 

,000 

,000 
,000 

,000 

,000 

6,250 
6,000 
7,500 
7,500 
7,500 
6,250 
6,250 
6,250 

2,600 
3,ooo 
3,300 
3,Qoo 
3,900 
4,700 
3,400 
3,000 

Lake-Rand  
Rand.-Wash  
Wash.-Mad  
Mad.-Mon  
Mon  —Adams 

Adams-  Jack  
Jack.-Van  B. 

Lake-Rand  
Rand.-Wash. 

Market  Street,  5241  Feet 

(0.60) 
(0.50) 
(0.40) 
(0.3°) 
(0.20) 
jo.isj 
(o.io) 

(100) 
73 
106 
(50) 
(40) 
(40) 
(35) 

<l 

(] 

°) 

o) 

t7) 

i 
& 

(ISO) 
(200) 
(250) 
(250) 
(150) 
(125) 
(100) 

(75) 
(100) 
(125) 
(125) 
(75) 
(60) 
(So) 

300 
400 
500 

Soo 
400 
300 
200 

200 
250 
300 

350 
275 
200 

IOO 

2,250 
2,000 
2,60O 
3,400 
3,400 
3,500 
2,500 

3 

4 

1 

5 
4 
3 

,500 

,000 
,000 
,000 
,000 

,250 
,500 

6,000 
7,000 
7,000 
7,000 
6,000 
6,000 
6,000 

2,800 
3,8oo 
3,900 
3,5oo 
3,5oo 
3,  ioo 
2,500 

Wash.-Mad  
Mad.-Mon  
Mon  .-Adams  
Adams-  Jack  
Jack.-Van  B  

*  East  side  of  street. 

services  has  mounted  more  rapidly  than  the  prices  of  farm  products, 
and  it  is  believed  that  an  index  based  on  the  current  wages  of  unskilled 
factory  labor  would  be  as  good  if  not  a  better  means  of  correcting  the 
current  dollar  value  of  Chicago  land.  Accordingly,  Figure  77  shows  the 
number  of  days  of  unskilled  labor  required  to  purchase  the  site  of  Chi- 
cago at  different  periods.  Inasmuch  as  wages  of  unskilled  labor  have 
hitherto  held  a  considerable  part  of  the  gains  made  on  each  violent  up- 
swing in  the  price  level  and  unskilled  wages  in  1926  stood  five  times  as 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         347 


high  as  in  1840,  such  a  method  of  correcting  the  aggregate  land  values 
of  the  city  greatly  reduces  such  values.  In  fact,  even  including  the 
areas  that  have  registered  the  greatest  increases  and  not  singling  out 
the  blighted  areas,  the  increase  in  the  number  of  labor  days  required 
to  purchase  the  site  of  Chicago  increased  but  slightly  from  1892  to 
1926. 

TABLE  XLV 

VALUE  OF  LAND  IN  CHICAGO  BY  PRINCIPAL  TYPES  OF  USES,  1910-33 
(Millions  of  Dollars) 


Year 

Outlying 
Business 

Loop 

Industrial 

Residential 

Total 

IQIO 

2  CO 

600 

2OO 

^oo 

I     ?OO 

>*  „   •    • 
1028 

I     333 

I    OOO 

4.OO 

2    267 

5    OOO 

IQ33  . 

3OO 

e;oo 

2OO 

I    OOO 

2    OOO 

a)  The  change  in  the  interest  rate. — Another  factor  of  the  greatest  im- 
portance has  been  the  change  in  the  long-term  interest  and  capitaliza- 
tion rates  in  Chicago.  As  Figure  78  shows,  interest  rates  on  Chicago 
real  estate  have  changed  greatly  in  a  century.  In  1856  the  interest  rate 

TABLE  XL VI 

INDEX  NUMBERS  OF  CHICAGO  LAND  VALUES  BY  PRINCIPAL  TYPES  OF  USES 

(1910=100) 


Year 

Outlying 
Business 

Loop 

Industrial 

Residential 

Total 

IQIO 

IOO 

IOO 

IOO 

IOO 

IOO 

1928  
IQ33  .  . 

667 
ItJO 

I67 
83 

215 
IOO 

453 
200 

353 
143 

on  the  best  mortgages  in  the  central  business  district  was  10  per  cent, 
by  1873  it  was  8  per  cent,  and  from  there  it  dropped  to  5  per  cent  in 
1 88 1  and  to  4  per  cent  by  1897.  From  1873  to  1897  central  business 
land  values  would  have  doubled  even  if  the  income  had  remained  the 
same,  because  the  same  income  would  have  been  capitalized  at  half  the 
former  rate.  Accordingly,  it  has  seemed  proper  to  construct  a  curve  of 
land  values  on  the  supposition  that  the  8  per  cent  rate  of  1873  had  con- 
tinued to  prevail  and  to  show  how  much  change  in  land  values  has  oc- 


348 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


curred  independent  of  the  changes  in  interest  rates.    This  irons  out 
much  of  the  rise  from  1879  to  1890. 

b)  Allowance  for  the  cost  of  street  improvements. — A  deduction  must 
likewise  be  made  from  aggregate  Chicago  land  values  for  the  cost  of 

THE  TREND  OF  CHICAGO  LAND  VALUES,  POPULATION  AND  MANUFACTURING 

1835-1933 

MANUFACTURES:I=$5,000,000 
LAND  VALUES:  |=$5pOO,OOO 
POPULATION'  1=  5,000 


rTTTTTTTTTi 


FIG.  76 

street  pavements,  sewers,  sidewalks,  and  other  improvements,  the  cost 
of  which  has  been  chiefly  paid  for  by  special  assessments  against  the 
property  affected,  if  one  desires  to  obtain  the  net  site  value  of  the  land. 
The  total  amount  so  spent  in  the  entire  period  of  the  century  has 
amounted  to  approximately  $600,000,000.  Current  prices  of  lots  in- 
clude all  street  improvements  installed  and  paid  for  but  are  usually  sub- 
ject to  unpaid  assessments.  In  deducting  the  cumulative  amount  of  the 


CHICAGO  LAND  VALUES  IN  CURRENT  DOLLARS  AND  IN  VALUES  CORRECTED 
FOR  CHANGES  IN  WHOLESALE  PRICES,WAGES  AND  INTEREST  RATES 

1=45,000,000 

I  -    5,000.000  DAYS  Or  UNSKILLED  LABOR 


FIG.  77 


THE  INTEREST  RATE  ON  IMPROVED  REAL  ESTATE  IN  THE 

CENTRAL  BUSINESS  DISTRICT  OF  CHICAGO 

COMPARED  WITH  THE  YIELD  ON  RAIL  BONDS 

1633-1933 


II  liT  1  i  !  !  I  I  i  I  !  I  1  1  I  1 1  I 


FIG.  78 


350 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


cost  of  public  improvements  in  Chicago  from  the  time  of  the  earliest 
records  from  the  aggregate  land  values  of  each  year,  there  is  accordingly 
a  slight  exaggeration  because  only  parts  of  the  assessments  of  each  of 
the  last  few  years  are  immediately  due  and  payable.  Since  this  affects 

MILES  OF  NEW  PAVEMENTS  CONSTRUCTED  ANNUALLY  IN  CHICAGO 
1855-1932 


YEARS 

FIG.  79 

only  the  part  of  the  instalments  for  three  or  four  years,  and  not  for  the 
entire  period,  the  error  is  not  great. 

If  Chicago  land  values  are  corrected  for  these  various  factors,  it  will 
be  noted  that  land  values  so  deflated  have  failed  to  keep  pace  with  the 
increase  of  population.  It  would  appear,  therefore,  that  if  inflationary 
elements  are  eliminated  from  land  values,  population  growth  must  not 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         351 

only  continue  to  sustain  rising  land  values,  but  it  must  continue  at  a 
faster  pace  than  at  certain  past  periods,  if  a  real  increase  in  aggregate 
land  values  is  to  be  maintained.  If  the  blighted  area  of  declining  popu- 
lation be  reduced  to  the  number  of  days  of  unskilled  labor  required  to 
purchase  it,  a  sharp  decline  in  its  labor  day  value  occurred  from  1892 
to  1928. 

2.  Growth  of  money  at  compound  interest  and  rise  of  land  values  com- 
pared.— A  further  comparison  may  now  be  made  between  the  rate  of 
growth  of  money  at  compound  interest  and  the  rate  of  increase  of  Chi- 
cago land  values.  In  Tables  XL VII  and  XLVIII,  and  in  Figure  80,  the 
aggregate  values  of  Chicago  land  at  peak  and  valley  periods  at  different 
dates  have  been  put  at  compound  interest  at  6  per  cent  per  annum.  It 
will  be  noted  that  even  the  peak  land  value  of  1836  would  have  amount- 
ed by  1933  to  the  land  value  actually  prevailing  in  that  year,  while  later 
peak  values  would  have  amounted  to  much  greater  sums.  In  regard  to 
such  comparisons,  two  qualifications,  however,  must  be  made.    The 
first  is  that  such  computations  could  only  be  fairly  applied  to  vacant 
land,  inasmuch  as  improved  land  in  most  cases  earns  its  interest,  so  that 
any  increase  in  capital  value  is  a  net  gain.  The  second  observation  is 
that  it  would  have  been  extremely  difficult  if  not  impossible  to  have  se- 
lected investments  that  have  yielded  a  net  return  of  5  or  even  6  per 
cent  per  annum  for  the  period  covered  by  this  study. 

3.  Taxation. — During  the  century  of  the  rise  of  Chicago  land  values, 
aggregate  taxes  have  been  constantly  increasing,  as  Figure  96  shows. 
The  actua-lsassessment  of  taxes  prior  to  1928  favored  outlying  vacant 
land  at  the  expense  of  the  Loop  and  of  developed  property,  so  this  in- 
crease in  the  tax  rate  did  not  bear  so  heavily  on  the  sections  in  which 
land  values  rose  so  greatly  from  1921  to  1926. 42  The  reassessment  in 
1928  shifted  the  burden  from  the  Loop  to  the  outer  sections.43  Taxes 
continued  to  increase  until  the  Chicago  tax  levy  for  school  and  corpo- 
rate purposes  for  the  eight  years  ending  in  1931  was  greater  than  the  en- 
tire tax  levy  for  the  ninety-three  years  before  I923.44  The  per  capita  tax 

42  Herbert  D.  Simpson,  Tax  Racket  and  Tax  Reform  in  Chicago  (1930). 

«  According  to  investigations  made  by  the  writer,  the  tax  bills  for  most  of  the  Loop  were 
lower  in  1928  than  in  1927,  while  for  nearly  all  other  property  they  were  much  higher. 

44  The  aggregate  Chicago  city  and  school  tax  levy  for  the  eight  years  1924-31,  inclusive, 
was  $1,061,100,362.  The  aggregate  Chicago  city  and  school  tax  levy  for  the  eighty-six 
years  from  1837  to  1922,  inclusive,  was  $1,020,561,853.  As  the  taxes  for  the  seven  years 
1830-36  were  insignificant,  being  only  $5,906  in  1837,  there  can  be  no  doubt  but  that  the 


352 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


RATE  OF  INCREASE  OF  CHICAGO  LAND  VALUES,  1830-1933  COMPARED  WITH 
THE  RATE  THE  TOTAL  LAND  VALUES  OF  EACH  PEAK  PERIOD 
WOULD  HAVE  INCREASED  AT 52 AND  62  COMPOUND  INTEREST 


FIG.  80 


taxes  for  the  ninety- three  years  from  1830  to  1922,  inclusive,  were  less  than  for  the  eight 
years  ending  in  193 1 .  Of  course,  the  growth  of  the  city  in  area,  population,  and  in  the  number 
and  complexity  of  its  governmental  agencies  must  be  taken  into  account  in  considering 
the  absolute  increase  in  taxes.  Moreover,  it  is  important  in  connection  with  tax  policy  to 
note  that  expenditures  on  such  improvements  as  school  buildings  may  favorably  affect 
real  estate  values  (Report  of  the  Comptroller  of  the  City  of  Chicago  [1931],  p.  i73>  for  the 
figures  from  1837  to  1930,  inclusive;  figures  for  1931  from  unpublished  records  of  the  City 
Comptroller's  office). 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         353 

for  city  and  school  purposes  increased  from  approximately  one  dollar 
in  1840  to  fifty  dollars  in  1930,  a  rise  of  fifty  fold.  The  Chicago  tax  levy 
for  the  year  1930  alone  was  greater  than  the  corresponding  city  and 
school  levy  for  the  entire  period  from  the  founding  of  the  city  to  the 
first  World's  Fair.45  The  continuing  heavy  tax  load  in  1930,  when  real 
estate  net  incomes  had  sharply  declined  and  when  several  years'  taxes 
had  accumulated,  was  another  blow  to  land  speculation. 

E.    TREND  OF  POPULATION  AND  LAND  VALUES  BY  DISTRICTS 

In  considering  the  trend  of  aggregate  or  average  Chicago  land  values, 
there  is  a  danger  in  overlooking  the  vast  differences  in  value  that  exist 
at  the  same  time  between  different  tracts  of  land  within  the  city.  The 
numerous  charts  and  graphs  showing  land  values  by  types  of  uses  and 
by  square-mile  sections  should  have  made  the  reader  familiar  with  these 
land- value  variations.  In  this  concluding  section  of  this  chapter,  space 
prevents  the  repetition  of  this  mass  of  detail,  and  only  a  broad  view  of 
the  relationship  between  population  shifts  of  land  values  within  the 
city  can  be  presented. 

i .  The  centrifugal  forces  affecting  population. — The  population  of  Chi- 
cago was  at  first  concentrated  near  the  center  of  the  city  and  the  den- 
sity curve  resembled  a  cone  with  the  sides  sloping  sharply  downward.46 
As  population  increased  and  transportation  facilities  improved,  the 
base  of  this  cone  widened  and  the  rate  of  most  rapid  population  increase 
passed  to  successive  belts  of  land,  each  one  in  turn  farther  from  the 
main  business  district.47  After  1870  the  height  of  the  population  pyra- 
mid rose  only  slowly  but  the  base  widened  rapidly.  In  the  twentieth 
century  the  number  of  people  living  within  the  areas  that  once  con- 
tained the  entire  city  stopped  advancing  and  began  to  decline.48  Be- 
tween 1920  and  1930  the  remarkable  change  in  the  distribution  of  the 
population  of  Chicago  is  made  strikingly  evident  by  Figures  82  and  86. 
A  large  crater  has  appeared  near  the  heart  of  the  city,  and  there  is  no 

«  The  aggregate  Chicago  city  and  school  taxes  from  1837  up  to  and  including  1893  were 
$155,977,669.  The  Chicago  city  and  school  tax  for  1930  alone  was  $168,606,720.  Same 
references  as  in  note  44. 

<6  See  Figs.  85  and  86.  Population  by  square-mile  areas  from  1840  to  1890  based  on  the 
study  by  R.  G.  Callahan  based  on  returns  from  election  precincts.  For  the  periods  1900- 
1920  the  figures  of  the  Chicago  Surface  Lines  are  used,  and  for  the  year  1930  the  square- 
mile  totals  are  derived  from  U.S.  Census  tracts. 

47  See  Fig.  83.  <8  See  Fig.  84. 


354 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


TABLE  XL  VII 

THE  AMOUNT  TO  WHICH  THE  SALES  VALUE  OF  CHICAGO  LAND  AT  DIFFERENT  PERIODS 
WOULD  HAVE  GROWN  AT  6  PER  CENT  COMPOUND  INTEREST 
(Thousands  of  Dollars) 

<f> 

to 

Oi 

CMvOvoOcMOO'-'O   TJ-NO   O   O 

O    ^  CO  O  NO  OO    Q    ONONO    VOVOO 
NO  OO    O    VONO    M     O    CM    VO  tOOO    M    O 

TfOO    CMCOCMOOTJ--3-OVO  lOOO    O 
^O    *$•  O    OOONONO    vo  ^  O  NO    M    O 
00    CO  M     O  ONNO    COCO    M    CM    IO  O 

CM            M    COCO    VONO  NO    10  TJ-  t^ 
M              M              M 
€9= 

CM 

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o  NO"  S  S>  R  5  [o  £%  vo  8  o 

; 

CO    M    CONO  NO  OO  CO   vooo  OO    O 

H            t^CM     CM     COO     ^COCM    VO      ; 

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M   ^  r^*  10  ^*o  ^ooo   o^  O 

CS      tH      Tf    M     ^"    H      M 

8 

C* 

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cs    <N  CO    O    O    O\  O    ^    O            ... 
100  ^O   ^t*  M   r^-  o   *>-  O 

^-  ^}-  10  M    CS  OO  ^O  OO    O             ... 

M    ^~  w  OO    t*^  O    0s  O            ... 

M              CS     M     <N     M 

1 

SS^8o8S88::::: 

CM           O    CO  t***  vo  vo     

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00 

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CO    O    M    t^NO   vo  O      

t^  VOOO     ^J"  CM     Tj-   O       

CMCMCMt^-MMO       

K 

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00 

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Q\  rj-  O  NO    t^»  O       

M      M      Q>NO      O     VO       

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M 
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00 

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M                 

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00 

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co         CS             

M                  

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1 

g"  CM     O                       

CO  co  -^                  

r^  M                   

H                         

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to 

00 

CM     O       

o    

Original 
Amount 

£§o§§§§§§8888 

2M^S£  §>§§>§§§ 

H     H     M     CM     VO  CM 
€/^ 

S 

COOOOOOOCOCOCOOO    ONONONONON 

GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


355 


longer  any  population  cone,  for  as  one  goes  northward  along  the  lake 
the  population  density  does  not  show  a  downward  slope.  This  is  dem- 
onstrated again  by  Figure  84,  which  shows  how  the  population  curve 
drawn  through  the  area  extending  north  and  south  for  a  mile  east  of 
Ashland  Avenue  had  flattened  out  by  1930.  This  great  shift  of  popula- 
tion from  close  proximity  to  the  center  of  the  city  to  new  districts  on 
what  had  once  been  the  outer  edges  of  Chicago  was  made  possible  by 
the  elevated  lines,  the  automobile,  and  the  telephone,  which  quickened 
the  speed  of  transportation  and  communication.  The  attractions  of 

TABLE  XLVIII 

THE  RISE  IN  CHICAGO  LAND  VALUES  COMPARED  WITH  THE  GROWTH  OF 

LAND  VALUES  AT  6  PER  CENT  COMPOUND  INTEREST 

(Per  Cent  of  Sales  Value  at  Respective  Periods  of  Original  Investment  Was  Put 
on  Compound  Interest  at  6  Per  Cent) 


Original 

Year 

Amount 

1836 

1841 

1856 

1861 

1873 

1879 

1892 

1900 

1910 

1920 

1926 

1933 

(Thousands) 

1830 

$            160 

2.27 

21  .7 

0.58 

1-7 

0.34 

I.I 

0.32 

0.94 

1  .1 

i-5 

0.86 

3.2 

1836  

10,000 

IOO.O 

947.O 

24.8 

70.0 

14.0 

48.8 

17.4 

41.6 

S3  -3 

66.7 

38.0 

142.4 

1841  

i  ,400 

IOO.O 

2-7 

7-5 

5  -1 

4.4 

5-2 

3-9 

4.0 

IS- 

1856  

125,000 

IOO.O 

280.0 

58.5 

191  .0 

67.9 

162.3 

190.0 

260.0 

148.0 

555- 

1861  

60,000 

IOO.O 

21.  0 

68.5 

24.4 

58-2 

74-4 

93-3 

53-0 

199. 

1873  
1879  

575,000 
250,000 

IOO.O 

388.6 

IOO.O 

116.0 
35-6 

277-3 

120.6 

355-0 
154-0 

313-5 
136.2 

252.3 
77-3 

948. 
283- 

IOO.O 

239  .0 

305.0 

383  .0 

217.5 

817.' 

IOO.O 

128. 

160.4 

90.6 

342. 

IOO.O 

IOO.O 

76    7 

255. 

IOO.O 

S6-7 

213-3 

IOO.O 

375-9 

1033  

2,000,000 

IOO.O 

modern  buildings  and  of  motion-picture  places,  banks,  and  chain  stores 
in  these  newly  settled  communities  were  the  centrifugal  forces  that 
whirled  people  from  their  old  abodes  into  the  new  bright-light  areas. 
In  their  wake,  between  the  Loop  and  the  new  sections  were  left  the 
"blighted  areas." 

The  difference  in  land  values  between  these  old  and  new  areas  is  not 
measured  by  the  number  of  people  alone,  for  the  races,  nationalities, 
and  classes  dwelling  in  these  "blighted  areas"  are  the  lowest  in  the  so- 
cial and  economic  scale.  As  people  are  not  concentrated  in  large  tene- 
ments in  these  poor  areas,  but  are  thinly  spread  over  these  districts  in 
single-family  dwellings  or  small  apartment  buildings,  their  low  indi- 
vidual purchasing  power  is  not  overcome  by  their  aggregate  mass.  Con- 
sequently, a  low  level  of  rents  and  a  high  percentage  of  loss  in  collecting 


356 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


that  small  amount,  a  heavy  rate  of  physical  deterioration  of  property 
caused  by  waste,  neglect,  and  acts  of  vandalism,  reduce  land  values  in 
these  sections  occupied  by  "hobos,"  seasonal  workers,  and  criminals  of 

POPULATION  GROWTH  OF  CHICAGO  BY  TWO  MILE  ZONES 

DISTANCE  FROM  STATE  AND  MADISON  STREETS 
I     =ZONE  0-2    MILES 
H  =ZONE  2-4    MILES 

S=  ZONE  4-6    MILES 
=  ZONE  6-8    MILES 
3C    =  ZONE  8-  10  MILES 

I  =  1000  POPULATION 


FIG.  81 

native  American  stock  and  by  the  lowest  classes  of  Mexicans,  negroes, 
and  South  Italians  to  a  very  low  point.49  There  is  now  a  valley  in  the 
land- value  curve  between  the  Loop  and  the  outer  residential  areas  that 
indicates  the  location  of  these  sections  where  the  buildings  are  mostly 

«  See  Fig.  86. 


I        3t 


CENSUS  TRACTS 

OF- 

CHICAGO 


GROUPED     INTO    113    AREAS 

SHOWING  INCREASE    OR 
DECREASE   OF    POPULATION 

I9ZOTOI930 


400-SM 

S8S8  «• •»» 

000  1999 

ovr.f?  zoao 


FIG.  82. — Area  inclosed  by  broad  black  band  is  the  territory  in  which  the  population 
declined  from  1920  to  1930. 


358 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


over  forty  years  old50  and  where  the  residents  rank  lowest  in  rent-paying 
ability  and  highest  in  criminal  activity.51 


POPULATION  PER  SQUARE  MILE    v 
IN  SECTION  FROM  ASHLAND  TO  HALSTED 
FROM  FULLERTON  TO  PERSHING  ROAD 

WOO,  IS5°TOI88° 


FIG.  83 

2.  The  effect  of  population  changes  on  the  land-value  pattern. — The  re- 
markable change  in  the  population  pattern  of  the  city  between  1920 

s°  From  a  large  map  in  the  office  of  the  Chicago  Plan  Commission  showing  the  age  of 
every  building  in  the  area  from  Belmont  to  Sixty- third  Street  and  from  the  lake  to  Kedzie 
Avenue.  This  study  was  based  on  the  Sanborn  insurance  atlases. 

s*  Clifford  R.  Shaw,  Delinquency  Areas  (Chicago:  University  of  Chicago  Press,  1929). 


POPULATION  PER  SQUARE  MILE  IN  SECTIONS  FROM  ASHLAND  TO  HALSTED 

FROM  TOUHY  ON  NORTH  TO  127™  QN  SOUTH 

1890,1910,1930 


me  secr/OM  reo*  HALSTCO 


1 1  S 1 1 1 1  H  !  1 1 ! !  1 1 1 

JillSoSSsssSixSsiJS 
FIG.  84 


RESIDENTIAL  LAND  VALUES 

ONE  BLOCK  EAST  OF  ASHLAND  AVENUE  FROM   HOWARD  STREET  ON  NORTH  TO127  STREET  ON  SOUTH 
1910  AND  1928 


I     S 

'B     & 


!  ! 

S    5 


i  II 1 11 

*o         <o        ">         <o        *o         *o 

^     5     ^     5     2'    * 


1 1  I 


*  S 


FIG. 


36° 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


and  1930  was  matched  by  the  land- value  pattern.53  Land  values  for 
many  decades  formed  a  pyramid  which  had  its  apex  over  the  business 

POPULATION  DENSITY  PER  SQUARE  MILE  FOR  A  ZONE  OF  LAND 
EXTENDING  ALONG  THE  LAKE  FROM  THE  NORTHERN 

TO  THE  SOUTHERN  LIMITS  OF  CHICAGO 
BY  TEN  YEAR  PERIODS  FROM  1840-1930 


1840 


1850 


I860 


1870 


1880 


1890 


FIG.  86 


center,  and  which  sloped  sharply  downward  away  from  the  principal 
shops  and  stores.  This  land- value  pyramid  during  the  nineteenth  cen- 
tury was  skewed  toward  the  south  to  reflect  the  greater  development  of 
s»  See  Fig.  87. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES 


361 


that  side  of  the  city,  but  since  1900  it  has  become  skewed  to  a  far  great- 
er degree  toward  the  north.  Even  more  startling  than  the  shift  from 
south  to  north  was  the  raising  of  a  great  plateau  northward  to  cor- 
respond with  that  of  population,  and  the  disappearance  of  the  pyramid 
pattern  of  land  values.53  The  uplifting  of  land  values  in  the  outlying 
sections  until  they  were  equal  to  or  greater  than  the  values  of  sections 
near  the  Loop  was  the  consequence  of  the  rise  in  land  values  of  the 

LAND  VALUES  PER  ACRE  FOR  A  ZONE  OF  LAND  EXTENDING  ALONG  THE  LAKE 
FROM  THE  NORTHERN  TO  THE  SOUTHERN  LIMITS  OF  CHICAGO 

1836-1926  1928 


FlG.  87 

"outer  city"  or  the  area  north  of  Belmont  Avenue,  west  of  Kedzie 
Avenue,  and  south  of  Thirty-ninth  Street  at  a  much  more  rapid  rate 
than  that  of  the  "inner  city."54 

3.  The  difficulty  of  developing  new  areas  compared  with  the  difficulty  of 
reclaiming  liblighted  areas" — The  change  in  the  pattern  of  the  distribu- 

53  Land  values  for  the  area  extending  north  and  south  along  the  lake  shore  omitting  the 
Loop.   From  Kinzie  Street  to  Roosevelt  Road,  the  area  west  of  the  south  branch  of  the 
Chicago  River  to  Halsted  Street  was  taken.  Loop  land  values  were  omitted  because  they 
bear  no  relationship  to  the  population  residing  in  the  Loop,  and  because  they  are  too  great 
in  magnitude  to  be  shown  on  the  same  scale  in  the  later  years.  Loop  land  values  would  rise 
like  a  flagpole  in  the  center  of  each  of  the  pyramids  in  Fig.  87. 

54  See  Figs.  88  and  89;  also  Fig.  45  on  p.  263. 


362 


ONE  HUNDRED  YEARS  OF  LAND  VALUES 


tion  of  population  and  of  land  values  within  Chicago  during  the  last 
few  decades  indicates  that  the  friction  imposed  by  transportation  to  an 
expanding  population  was  less  than  that  of  obsolete  improvements  and 
diversified  ownership.  There  being  no  physical  barriers  to  the  expan- 
sion of  Chicago  save  that  imposed  by  the  lake  on  the  east,  it  was  easier 

CHICAGO  LAND  VALUES,  1830-1933 

INNER  CITY.BOUNDED  BY;BELMONT  AVE..LAKE  MICHIGAN.  PERSHING  RD..  KEDZIE  Mtloursax ncune) 
OUTER  CITY.  ALL  TERRITORY  EXCEPTING  "INNER  CITY"  WITHIN  THE  CITY  LIMITS  Or  1933 
ENTIRE  CITY,  ALL  TERRITORY  WITHIN  THE  CITY  LIMITS  OF  1933 
I  =  $50,000 


1  § 


FIG.  88 


in  most  cases  to  build  new  communities  on  tracts  of  virgin  prairie  by 
electric  elevated  or  surface  lines,  or  by  automobile  or  by  electrified  rail- 
road, than  it  was  to  remake  an  old  settled  area  and  to  give  it  a  new 
character.  That  a  renaissance  of  old  areas  is  not  impossible,  however, 
is  indicated  by  the  transformation  of  the  near  North  Side  after  1920, 
but  there  the  creation  of  a  new  double-decked  street,  which  became  the 
busiest  auto  highway  in  Chicago,  the  proximity  of  this  section  not  only 
to  the  Loop  but  to  the  lake  shore  and  the  Lake  Shore  Drive,  combined 
to  give  this  area  advantages  which  most  other  old  sections  did  not  pos- 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         363 

sess.  The  once  fashionable  area  of  the  near  South  Side  near  the  lake 
shore  may  be  redeemed,  for  the  strip  of  land  east  of  Cottage  Grove 
Avenue  from  Twenty-second  Street  to  Thirty-ninth  Street  has  many 
advantages,  with  both  the  lake  and  the  Illinois  Central  suburban  trans- 
onic AGO  LAND  VALUES.  1830-1933 

LOOP  BOUNDARIES  CHICAGO  RIVER  LAKE  MICHIGAN  VAN  BUREN  ST  .WELLS  ST 
INNER  CITY  -TERRITORY  SURROUNDING  THE   LOOP  AND  BOUNDED  BY: 
BELMONT  AVE.LAKE  MICHIGAN.  PERSHING  ROAD.  KEDZIE  AVE. 

OUTER  CITY- ALL  TERRITORY  SURROUNDING  "INNER  CITY", WITHIN  THE  CITY  LIMITS  OF  1933 
ENTIRE  CITY-ALL  TERRITORY  WITHIN  THE  CITY  LIMITS  OF  1933 


FIG.  89 

portation  close  at  hand.  There  are  large  sections  near  the  packing 
plants  on  the  South  Side,  west  of  Wells  Street  on  the  North  Side,  and 
south  of  Harrison  Street  on  the  near  West  Side  that  seem  to  offer  few 
attractions  for  residential  development,  unless  reclamation  of  the 
blighted  areas  is  to  be  attempted  on  a  grand  scale.  In  the  early  twenti- 
eth century,  when  wholesale  houses  and  manufacturing  plants  were  ex- 
panding in  the  vicinity  of  the  Loop,  it  seemed  possible  that  much  of  this 
area  would  be  absorbed  for  industrial  uses,  but  in  view  of  the  tendency 


364  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

of  factories  to  move  farther  out  to  locations  along  belt  lines,  it  now 
seems  to  be  the  consensus  of  opinion  that  most  of  this  low-grade  resi- 
dential area  has  little  chance  of  being  converted  into  a  higher- value  in- 
dustrial use.55 

4.  The  effect  of  shifting  land  uses. — The  land  values  in  different  sec- 
tions of  the  city  have  followed  several  different  trends.  The  areas  de- 
veloped for  workingmen's  homes  that  were  close  to  the  central  business 
district  later  acquired  a  high  land  value  as  sites  for  banks,  office  build- 
ings, warehouses,  or  factories.  The  cheap  residential  sites  that  were  a 
little  farther  away,  as  at  Bridgeport  or  that  were  on  Grand  Avenue 
west  of  Halsted  Street,  never  acquired  any  higher  value  except  in  a  few 
cases.  Land  values  in  those  old  areas  have  tended  to  flatten  out  since 
i8go.s6  This  tendency  became  pronounced  when  the  Loop  began  to  ex- 
pand vertically  rather  than  laterally.  On  the  other  hand,  there  are 
fashionable  districts  like  those  in  the  near  North  Side,  which  after  a 
period  of  brilliance  as  sites  for  mansions  decline  into  boarding-house 
areas,  and  then,  because  of  the  natural  advantages  which  originally 
favored  them,  make  a  "come-back"  as  sites  for  tall  apartment  build- 
ings. Other  once-fashionable  areas  such  as  those  on  Prairie  Avenue  or 
on  Ashland  Boulevard  partially  regain  their  former  values  when  they 
become  partially  occupied  with  industrial  or  commercial  buildings,  but 
they  never  attain  their  former  land-value  peaks.  Finally,  there  are 
newly  developed  areas  on  the  outskirts  of  the  city,  which  remained  al- 
most entirely  vacant  until  the  last  few  decades,  but  whose  values  rose 
in  each  succeeding  land  boom,  until  they  reached  their  apex  for  all  time 
prior  to  ig2g.57  From  the  foregoing  discussion,  it  becomes  evident  that 
it  is  difficult  to  assert  that  the  land- value  cycle  of  a  given  section  fol- 
lows a  definite  pattern.  In  general,  a  section  that  becomes  rilled  with 
cottages  or  bungalows  has  reached  the  "ceiling"  or  limit  of  its  develop- 
ment, as  it  is  easier  to  move  to  a  new,  unoccupied  area  than  it  is  to 
wreck  the  existing  structures.  Land  values  in  such  a  section  will  tend 
to  decline  as  the  buildings  grow  older  and  the  original  community  mi- 
grates or  is  replaced  by  a  lower  economic  or  social  class.  Areas  in  spe- 
cially advantageous  locations  such  as  along  the  lake  shore,  however, 

ss  Clifford  Bechtel,  chairman  of  the  Committee  of  the  Chicago  Real  Estate  Board,  work- 
ing on  the  problem  of  the  blighted  area,  has  expressed  this  opinion  in  public  addresses. 
«6  See  Fig.  59  on  p.  318. 
57  See  Fig.  54  on  p.  306. 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         365 

that  were  first  developed  as  home  sections  later  acquired  high  land  val- 
ues as  sites  for  kitchenette-apartment  buildings. 

5.  Speculative  exaggeration  of  possible  demand  for  certain  types  of  uses. 
—In  each  successive  land  boom  there  is  a  speculative  exaggeration  of 
the  trend  of  the  period,  until  an  inevitable  reaction  follows.   In  1836 
there  was  over  speculation  in  land  fronting  on  rivers  and  lakes;  in  1856 
excessive  emphasis  was  placed  on  lots  for  cheap  homes;  in  1873  there 
was  an  inflation  in  the  amount  and  the  ground  values  of  land  suitable 
for  mansions  and  suburban  residences;  in  1890  wild-cat  speculation 
prevailed  in  projected  manufacturing  townsites  or  in  lots  along  pro- 
posed elevated  routes  or  near  the  World's  Fair;  and  in  the  boom  prior 
to  1929  there  was  an  unprecedented  rise  in  the  values  of  apartment- 
building  land  and  of  outlying  business  sites.  The  movement  of  popula- 
tion outward  from  the  center  of  the  city  produced  even  greater  changes 
in  speculative  land  values  than  the  situation  warranted,  so  that  even 
if  the  migration  of  people  toward  the  suburbs  continues  in  the  future, 
it  can  hardly  exceed  the  expectations  of  1926.  On  the  other  hand,  the 
proposals  to  reclaim  the  blighted  areas  set  up  the  prospect  of  a  possible 
reversal  of  the  movement  away  from  the  center  in  favor  of  living  within 
walking  distance  of  the  Loop. 

6.  The  future  trend  of  population  and  land  values. — The  future  popu- 
lation and  land- value  patterns  of  Chicago  depend  upon  a  sequence  of 
factors.  If  the  population  of  the  entire  United  States,  with  immigration 
curtailed  and  birth-control  practices  on  the  increase,  reaches  a  static 
equilibrium  of  155,000,000  by  1955  and  then  begins  to  decline,  as  Pro- 
fessor William  F.  Ogburn  suggests,58  the  rate  of  growth  of  Chicago  in 
the  nineteenth  and  early  twentieth  centuries  which  was  supported  by 
heavy  immigration  from  abroad  as  well  as  by  the  natural  increase  of  the 
resident  population  can  hardly  be  maintained.    If  the  proportion  of 
people  dwelling  in  cities  diminishes  instead  of  increasing  as  it  has  in  the 
past  century,  the  possibilities  for  the  further  rapid  growth  of  Chicago 
will  likewise  be  limited.  It  will  finally  also  be  a  question  of  what  pro- 
portion of  all  the  urban  residents  in  the  United  States  the  industries 
located  in  Chicago  can  attract  and  support  in  competition  with  the 
producing  concerns  in  other  cities.  In  the  past  century  Chicago,  by  its 
favorable  situation,  has  been  able  to  attract  industries  that  could  draw 
to  the  city  and  support  a  rapidly  growing  population  that  increased 

s8  Lecture  delivered  at  the  University  of  Chicago  in  1933. 


366  ONE  HUNDRED  YEARS  OF  LAND  VALUES 

faster  than  the  urban  population  of  the  nation  as  a  whole,  which  in 
turn  was  increasing  much  faster  than  the  number  of  people  in  the  entire 
United  States,  which  aggregate  population  in  turn  was  growing  faster 
than  that  of  most  of  the  older  countries  of  Europe.  From  1830  to  1930 
the  growth  of  Chicago  was  helped  by  the  strong  current  of  population 
increase  for  the  United  States  and  for  American  industrial  and  trading 
cities,  but  if  this  current  slackens  or  reverses  itself,  it  is  hard  to  believe 
that  Chicago  will  make  as  rapid  progress  against  this  current  as  it  did 
with  it.  This  is  of  course  to  a  large  extent  speculative. 

Moreover,  if  a  changed  national  policy  should  open  the  doors  to 
another  tide  of  European  immigration,  and  if  the  demand  for  increas- 
ing manpower  to  defend  the  nation  from  foreign  aggression,  added  to 
the  condemnation  of  birth  control  by  some  of  the  churches,  leads  again 
to  the  rearing  of  large  families,  then  the  population  of  the  United  States 
may  continue  to  grow  until  it  reaches  a  total  of  200,000,000  or  more. 
Again,  it  is  possible  that,  without  any  such  rate  of  increase  in  the 
number  of  people  in  the  country,  sensational  gains  in  the  amount  of 
crops  harvested  per  acre  may  reduce  still  further  the  number  of  persons 
required  to  till  the  soil,  and  will  enable  an  even  greater  proportion  of  the 
population  to  live  in  the  cities.  Chicago  itself  may  continue  its  remark- 
able growth,  even  if  other  urban  centers  decline.  New  and  startling 
inventions  such  as  occurred  during  the  first  hundred  years  of  Chicago's 
development  may  continue  during  the  second  century  of  its  history, 
and  these  may  bring  about  in  the  Chicago  region  the  greatest  concentra- 
tion of  people  the  world  has  ever  known.  Finally,  the  shift  in  emphasis 
from  heavy  manufacturing  industry  to  trade,  finance,  and  professional 
service  may  well  redound  to  the  advantage  of  Chicago,  whose  location 
as  a  site  for  a  trading  and  financial  metropolis  is  unsurpassed. 

If  the  aggregate  population  of  Chicago  be  determined  as  a  result  of 
the  foregoing  factors,  the  distribution  of  that  population  within  the 
city's  metropolitan  area  will  depend  upon  the  strength  of  the  desire  to 
liVe  in  the  suburbs  or  in  new  neighborhoods  far  from  the  Loop,  com- 
pared to  the  intensity  of  the  demand  for  residences  in  apartments  near 
the  business  center  in  reclaimed  blighted  areas.  The  effect  of  the  popu- 
lation distribution  upon  land  values  will  likewise  depend  upon  whether 
people  prefer  to  live  in  small  homes  or  in  large  apartment  buildings, 
which  will  depend  in  turn  upon  the  size  of  the  average  family  and  upon 
social  habits  and  customs.  The  effect  of  the  population  upon  land 


GROWTH  OF  CHICAGO  AND  ITS  LAND  VALUES         367 

values  will  likewise  depend  upon  the  distribution  of  purchasing  power 
between  the  members  of  that  population  and  the  proportion  of  their 
income  that  is  available  for  rent.  While  an  expanding  population  is 
compelled  to  pay  for  the  added  quarters,  rents  high  enough  at  the  out- 
set to  pay  operating  expenses,  and  a  normal  return  on  building  costs,  a 
stationary  or  declining  population  might  not  find  it  necessary  to  main- 
tain such  charges  on  existing  buildings.  Rents  might  then  be  deter- 
mined as  they  are  in  depression  periods  by  the  amount  of  money  avail- 
able for  rent  payments  after  food  requirements  were  met. 

Land  values  will  likewise  be  affected  in  the  future  by  the  aggregate 
amount  of  the  tax  burden  and  by  the  proportion  of  it  that  is  levied  on 
real  estate  and  by  the  rate  of  interest  on  real  estate  mortgages  and  the 
rate  for  capitalizing  net  rents.  Such  factors  will  affect  the  long-run 
trend  of  land  values  as  measured  in  dollars  of  constant  purchasing 
power. 

It  is  obvious  from  the  preceding  discussion,  however,  that  land  values 
in  terms  of  market  prices  rise  far  above  the  capitalized  long-term  net- 
income  value  in  a  boom  and  fall  below  it  in  a  depression.  A  land-value 
forecaster  would  have  to  determine  not  only  the  future  trends  of  popu- 
lation, rents,  operating  expenses,  taxes,  and  capitalization  rates,  but  he 
would  have  to  estimate  to  what  extent  these  movements  will  be  ex- 
aggerated by  speculative  manias  or  be  underrated  in  the  period  when 
foreclosures  of  trust  deeds  are  at  their  peak.  Finally,  an  estimate  must 
be  made  for  changes  in  the  purchasing  power  of  the  dollar,  particularly 
when  rapid  changes  in  the  gold  value  of  the  dollar  are  imminent. 

In  view  of  the  complex  nature  of  the  foregoing  factors,  and  the  al- 
most unlimited  number  of  combinations  of  ways  in  which  they  could 
interact  upon  each  other,  it  would  be  foolhardy,  indeed,  to  predict  the 
future  aggregate  trend  of  Chicago  land  values.  If,  as  asserted  by  stu- 
dents of  the  population  problem,59  the  trends  of  growth  of  the  past  cen- 
tury are  not  likely  to  be  repeated,  then  it  seems  probable  that  the  land- 
value  curve  of  Chicago  of  the  past  century  will  not  be  duplicated. 

»  R.  K.  Whelpton,  American  Journal  of  Sociology,  May,  1933,  pp.  825-34. 


CHAPTER  VII 
THE  CHICAGO  REAL  ESTATE  CYCLE 

A.    THE  TIDE  OF  POPULATION 

The  causes  of  land  booms  in  American  urban  sites  in  the  past  cen- 
tury could  usually  be  traced  to  factors  which  led  speculators  to  expect 
an  extraordinary  increase  in  the  population  of  the  locality  within  a  rela- 
tively short  time,  or  the  expectation  of  its  development  for  commercial 
and  industrial  purposes.  The  anticipated  population  growth  was  itself 
due  to  deep-seated  forces,  operating  over  the  entire  area  of  Western 
industrial  civilization.  There  was  a  rapid  growth  of  the  population  of 
all  of  the  leading  nations  of  Europe  and  America  by  natural  increase 
that  was  made  possible  by  the  new  machine  technique  and  the  opening 
of  new  continents  to  settlement.  In  addition,  there  was  a  great  west- 
ward migration  of  people  from  Europe  to  America,  and  from  the  eastern 
to  the  western  part  of  the  United  States.  The  individual  components  of 
this  human  tide  were  attracted  by  the  lure  of  cheap  land  and  were  car- 
ried to  these  hitherto  sparsely  settled  regions  by  the  new  steam  trans- 
portation. This  great  population  stream,  consisting  largely  of  young 
people  with  high  potential  powers  of  natural  increase,  spread  out  over 
the  land  or  collected  in  pools  at  certain  strategic  spots  as  it  flowed  west- 
ward. The  number  of  persons  which  any  one  town  site  could  attract 
from  this  current  of  people  and  hold  for  itself  depended  upon  its  natural 
advantages  for  trade,  commerce,  and  manufactures.  Therefore  the  par- 
ticular factors  contributing  to  the  mercantile,  financial,  and  industrial 
growth  of  Chicago  that  were  described  in  the  first  five  chapters  of  this 
work  are  of  fundamental  importance  in  explaining  why  so  many  people 
settled  there.  So  necessary  to  the  population  growth  of  an  urban  cen- 
ter is  the  growth  of  its  factories,  transportation  lines,  banks,  wholesale 
houses,  and  stores,  which  in  turn  depend  upon  the  extent  of  its  trading 
hinterland  and  its  advantages  for  manufacturing  plants,  that  land 
speculators  seldom  fail  to  stress  these  factors  in  describing  the  possi- 
bilities of  further  growth  and  the  rise  of  land  values  of  any  city. 

The  expectations  of  the  population  growth  of  American  townsites  in 
the  nineteenth  and  early  twentieth  centuries  were  thus  partly  based  on 

368 


THE  CHICAGO  REAL  ESTATE  CYCLE  369 

a  great  actual  movement  of  people  and  the  rapid  growth  of  the  cities  in 
the  territories  first  occupied.  During  periods  of  optimism  throughout 
the  United  States,  as  in  1836  and  in  1925  and  1926,  or  in  particular  sec- 
tions of  the  nation  as  in  the  North  following  the  Civil  War  or  in  the 
Middle  West  in  the  fifties  and  late  eighties,  the  possibility  of  population 
growth  was  magnified  to  undue  proportions.  More  townsites  were  laid 
out  in  Illinois  in  1836  than  could  be  filled  even  by  the  present  popula- 
tion, and  within  the  vicinity  of  Chicago  itself  more  lots  were  subdivided 
in  each  successive  boom  than  were  needed  for  several  generations  to 
come. 

Therefore,  there  is  no  exact  relationship  between  the  increase  in  the 
number  of  people  at  an  urban  site  and  the  increase  of  land  values,  be- 
cause speculative  influences  may  magnify  the  expected  future  increase 
beyond  all  reasonable  possibilities.  Nevertheless,  land  booms  in  Chi- 
cago have  generally  been  sustained  and  carried  to  their  peaks  partly 
by  a  sudden  and  extraordinary  rate  of  increase  in  actual  population 
growth  which  persisted  for  a  few  years,1  helped  to  foment  speculative 
excitement,  and  led  to  even  more  extravagant  hopes  for  future  popu- 
lation increase.  This  increase  in  the  rate  of  population  growth  was  one 
of  the  factors  that  led  to  an  increase  in  rents,  building  activity,  and 
subdivision  activity,  each  of  which  in  turn  was  carried  to  speculative 
excess,  and  each  of  which  interacted  upon  the  other  and  upon  land 
values  to  generate  and  maintain  the  boom  psychology.  There  is  thus 
a  chain  of  events  communicating  with  each  other  which  quickened  or 
retarded  the  pace  of  all  the  activities  connected  with  real  estate.  The 
description  of  the  sequence  of  certain  of  these  phenomena,  which  can 
be  measured,  is  one  of  the  best  ways  of  defining  the  Chicago  real  estate 
cycle.  In  the  following  account  it  must  be  constantly  borne  in  mind 
that  the  definite  quantitative  factors  are  but  symbols  of  the  broad  range 
of  forces  discussed  in  detail  in  Part  I. 

B.    DEFINITION  OF  THE  CHICAGO  REAL  ESTATE  CYCLE 

The  Chicago  real  estate  cycle  is  a  term  used  here  to  describe  the  com- 
posite effect  of  the  cyclical  movements  of  a  series  of  forces  that  are  to 
a  certain  degree  independent  and  yet  which  communicate  impulses  to 
each  other  in  a  time  sequence,  so  that  when  the  initial  or  primary  factor 
appears  it  tends  to  set  the  others  in  motion  in  a  definite  order.  Accord- 

1  See  Figs.  90  and  91. 


!    I    •    3    §    I    I     2    i    is    I 


CIT0I 


g       1  I 


o  o 


POPULATION  AND  RESIDENTIAL  LAND  VALUES  IN 

VARIOUS  SECTIONS  OF  CHICAGO 

1900-1933 


AREA  BOUNDARIES: DEVON, KEDZIE, 

IRVING  PARK,  CRAWFORD 
•1=7.500  POPULATION         $3.750.000  LAND  VALUE 


AREA  BOUNDARIES:  DEVON,  LAKE  MICHIGAN. 

IRVING  PARK,  ASHLAND 

=  12,500  POPULATION       $12,500,000  L